British Columbia, Canada, attracts wealthy individuals from all
over the world. The province may, however, present risk as a result
of a new family law regime introduced on 18 March 2013. Touted as
reflecting the norms of modern Canadian society, the Family Law
Act heralds a wholesale shift from the circa-1979 legislation
it replaces. There are major changes to the division of property.
Three issues in particular warrant review: unmarried cohabitants,
trust interests and business assets.
The new Act extends the legislated property division regime to
couples living in a 'marriage-like' relationship for at
least two years. Unsurprisingly, this has received media attention.
Identifying a marriage- like relationship is not easy. Unmarried
cohabitants – like married spouses – do not necessarily
live in the same house, or even in the same country. They need not
have children, sexual relations or joint bank accounts. Mobile,
wealthy people in particular often reside in several countries.
What constitutes a spousal relationship depends on the parties'
intention and their identification of their relationship to the
outside world. This is expected to generate considerable
The Act separates property into two categories: assets acquired
during the relationship and assets owned before the relationship.
Assets acquired by a spouse during the relationship are subject to
division, as is any growth in the value of otherwise excluded
property. Assets owned before the relationship began, or acquired
during the relationship by inheritance or gift, are prima facie
excluded from division.
Some say this new regime is intuitive and fair, but is that the
case for trusts?
Previously, trusts were popular as they provided some protection
against family law. Often a trust would hold the shares of a
private family corporation. Sometimes a trust was part of an estate
freeze, allowing the trust to own the common shares – which
held future growth – for the benefit of succeeding
generations, whose members were typically discretionary
beneficiaries. The trust interest of such a discretionary
beneficiary was arguably excluded from the claims of duelling
spouses, particularly if that beneficiary had no control over the
distribution of assets or income and had not contributed to the
The Act extends the property division regime to couples living
in a 'marriage-like' relationship for at least two
The Act now makes the growth in value of a trust as divisible as
any other asset. This is troubling as it appears to be the value of
the trust property that is shareable, rather than a spouse's
interest in the trust. On a literal interpretation, even where a
trust has multiple discretionary beneficiaries, the entire growth
in value of the trust will be divisible. This is unfair to other
beneficiaries and makes trusts much less attractive shields against
Formerly, to claim a share of business assets, a spouse had to
prove contribution, direct or indirect, to the business. This is no
longer a factor. Business assets are divisible like any others:
pre-relationship value is excluded, and any increase in value
during the relationship is divisible.
This could be unfair. For instance, in a long marriage where
both spouses were active in the business, there may be nothing to
share if the business did not increase in value. Conversely, in a
short marriage or two-year cohabitation, or where the business is
in another country, or where the shareholder was not active in the
business, any growth in business value is prima facie subject to
equal division. This will catch many people by surprise.
The Act does allow the court to depart from the legislation
where it would be 'significantly unfair' not to do so. How
the courts will interpret this is unclear.
The Act was meant to bring British Columbia family law into the
modern age and reflect societal changes; whether it will meet those
goals remains to be seen.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
It is not uncommon for parents to provide monetary gifts to their adult children. Parents may wish to help their child with a down payment on a property, or help pay out their child's existing mortgage.
On March 31, 2014, BC's new Wills, Estates and Succession Act1 ("WESA") will come into force. WESA introduces new protections for beneficiaries of estates that are in danger of being disputed or deemed ineffective by a court.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).