西温,列治文,温哥华,讲普通话和广东话家庭财产和继承律师
THE CURRENT DIVISION OF BC FAMILY PROPERTY DIVISION INHERITANCE AND GIFT LAW WILL ONLY LAST FOR THE NEXT 12-18 MONTHS
As medium to high net worth family lawyers who can be reached toll free across the province at 604 602 9000 and who speak, Mandarin, Cantonese, Hindi, Punjabi and Farsi in addition to English, we advise our clients and readers that the law in BC on BC Family Inheritances and Gifts is changing and you need to see a lawyer if you are in a troubled relationship or are considering entering into a new relationship as key differences in strategy now apply depending on whether you are the spouse who received the inheritance or gift or the non-receiving spouse. A receiving spouse should contact us immediately about a prenuptial or marriage agreement or may wish to commence an action immediately while the opposite strategy may apply to the other spouse depending on how an inheritance or gift has been used during the marriage.
For those of you whose first language is Mandarin or Cantonese please call us.
西温,列治文,温哥华,讲普通话和广东话家庭财产和继承律师
广东话服务请同Jennifer Lin 联络。联络电话：（604）576-5404 电邮：jlin@macleanlaw.ca
If you are Iranian call us غرب ونکوور وكيل خانواده at 604 602 9000.
THE NEW INHERITANCE AND GIFT FAMILY PROPERTY DIVISION TEST
The new act will do away with the thorny issue of how the gift or inheritance was used by the spouses after it was received- by excluding the full value of the inheritance that was received by the inheriting spouse and sharing ONLY THE GAIN on the inherited sum.
Under the new BC Family Law Act “Family property” does not include “excluded property”, which consist of the following: property acquired before the relationship, gifts and inheritances, awards and settlements, and property held in trust for a spouse (unless the spouse has an absolute interest in the property and the power to terminate the trust), with the exception that any increase in value of “excluded property” is considered family property [s. 77];
Example
An inheritance or gift received worth 100,000 under the old law and kept completely separate and apart from any usage of income or capital from it that grows to $1,000,000 over the course of a marriage is likely to not be shared under the current law. However, that same inheritance or gift under the new law regardless of how it was used would have the growth in value of $1,000,000 (current value) less $100,000 = $900,000 divided equally under the new law unless one spouse could meet a restrictive test of showing it would be clearly unfair to divide the gain equally.
At the end of a marriage, one of the most important issues is the division of family property. The basic principles relating to property division come from the Family Relations Act which generally holds that each spouse is entitled to a one-half interest in all property that is a “family asset”. The Act defines a family asset as property that is “ordinarily used for a family purpose.” This phrase has been interpreted to mean regular use in the course of day-to-day life.
Typically, family assets refer to property such as the family home and its contents, motor vehicles and other recreational vehicles, bank accounts, RRSPs, and pensions. These are assets that can usually be characterized as family assets with little difficulty.
The question of whether an inheritance gifted to one spouse during the marriage is a family asset is a little more complicated. Generally, a court will not qualify an inheritance as a family asset if the inheritance has not been ordinarily used for a family purpose. Therefore, when determining whether an inheritance is up for division during a divorce, the pertinent question is: how has this inheritance been used by the spouse to whom it was gifted or by the family as a whole?
Section 60 of the Family Relations Act states that the onus of proof lies on the party alleging that an asset in question has not been ordinarily used for a family purpose.
In considering such claims, court cases have found that:
1. the incidental or occasional use of an asset for a family purpose is not sufficient to characterize the asset as a family asset;
2. “ordinary use” for a “family purpose” means more than special, occasional or casual use (Elsom v. Elsom (1983), 49 B.C.L.R. 297 (C.A.));
3. and intended or even probable use is not sufficient to qualify the asset as a family asset (Underhill v. Underhill (1983), 45 B.C.L.R. 244 (C.A.);
4. the frequency by which the inheritance was used to purchase items used by the family is an important consideration;
5. consistent withdrawals from a separate fund for family purposes or using assets as security for family borrowing may constitute “ordinary use” (Hefti v. Hefti (1998), 57 B.C.LR. (3d) 171 (C.A.);
6. an intended or probable future use does not convert an asset into a family asset where a spouse inherited money six months before separation (Crocker v. Crocker (1993) B.C.J. No. 2404 (QL) (S.C.));
7. the fact that capital from the asset is used from time to time, when required, for a family purpose may be an indication that the asset is a family asset (Brainerd v. Brainerd (1989) B.C.J. No. 1223); and
8. the use of the asset to provide financial security and protection against erosion of income or other family misadventure in the future may constitute a present ordinary use for a family purpose (Tezcan v. Tezcan (1990) B.C.J. No. 498.
Perhaps the oft-cited passage from Evetts v. Evetts (1996) B.C.J. No. 2614 summarizes the test most clearly wherein the court states that “the fact that the words “ordinary used…for a family purpose” are the governing words in the statute means that the use patterns must be examined in each case to determine whether, in the ordinary course, the present use commitment to meet a present or future need includes a use for a family purpose”.
Therefore, until the new Act is in force one of the most important considerations involved in the classification of an inheritance as a family asset is the pattern of the use of the inheritance in the past and the contemplation by parties for its future use. Where one spouse inherited a large sum of money several years prior to separation, and that money was used to either pay down a mortgage on the family home, to purchase family vehicles, to undertake renovations on the family home, or if a portion of it was placed in a bank account to be used for retirement, these facts may lead to the conclusion that an inheritance may be a family asset.
As case law demonstrates, the determination of whether an inheritance is a family asset is very fact-specific. The particular facts of each case will be scrutinized closely to determine which side of the fence an inheritance falls on under he current but not new laws. It is not a black and white area of the law. Let us help you look at the facts in your situation to determine whether the asset in question in your family law dispute is a family asset that should be subject to fair and just division.
Call us now at 604 602 9000 or email the head of our high net worth and complex family law dispute team.
