In a previous
post, we discussed some of the issues raised by the new
Family Law Act (the "FLA") in the context of
Under the FLA, "family property" is divided equally
between spouses, and includes all real and personal property owned
by one or both spouses at the date of separation, unless the
property is "excluded property". If the property is
"excluded property", any increase in its value during the
relationship is still shared equally between the spouses on a
breakdown. Currently, "excluded property" includes
property held in a discretionary trust where the spouse did not
contribute to the trust, the spouse is a beneficiary of the trust,
and the trust was settled by a person other than the spouse. As a
result, many discretionary family trusts used for estate planning
fall within "excluded property" under the FLA. This means
that the growth in value of trust property during the relationship
may be subject to division, which is problematic since the
spouse's interest in the trust is only discretionary and there
is no guarantee the spouse will benefit from the trust
Recently, the provincial government introduced Bill 14, Justice Statutes Amendment
Act, which proposes amendments to the FLA in an effort to
address this concern. If the amendments come into force, the
meaning of "excluded property" will be modified with the
result that only the growth in value of a spouse's beneficial
interest in trust property (and not the trust property in its
entirety) will be subject to division. This change will help
clarify the application of the FLA to interests in discretionary
trusts, but will also raise valuation issues since it is more
difficult to value a spouse's interest in a discretionary
trust, than it is to value the underlying trust property.
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.
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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.
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