"Joint assets?! No way! I kept the house registered in my name to make sure he couldn't get any of it! Plus he never paid for anything!"
Meet Mary. As you can tell from the above, Mary is very ticked off. She had no idea that when she moved in with Sheldon that her hard earned assets had become joint with Sheldon once he lived with her for a more than two years.
The Family Law Act which came into effect in British Columbia on March 18, 2013 governs how spouses divide their property upon separation. The thing is, that Mary did not know Sheldon was even a spouse because when he asked her to marry him, she said "No thank you." Yet, once Sheldon and Mary lived with one another for more than two years, they became spouses under the Family Law Act.
Joint assets or not, under the new property division rules, both spouses are entitled to an equal share of family property and are equally responsible for the family debt. It does not matter that Mary did not register her investments and house jointly with Sheldon. They are still considered family assets.
The thing is that Mary has always been very frugal. Sheldon on the other hand, has always been a bit of a disaster in the finance department. Even though Sheldon was a disaster, this never bothered Mary. She adored Sheldon's free spirit and the fact that he was not always concerned about money.
When Sheldon moved in with Mary, Sheldon had a pile of debt and no assets. Mary, on the other hand, owned a nice house with a bunch of equity and a small mortgage. She also had some investments.
The good news for Mary is that unlike under the old Family Relations Act (now long gone and replaced with the Family Law Act), Mary gets to retain the original value in her house and the original value of her investments as her excluded property. The bad news is that while Sheldon was out partying on weekends and spending money and Mary was at home saving money, Mary has just learned that Sheldon gets to share not only in the increased value of the house, but in Mary's savings. Mary also has to shoulder half of Sheldon's debt.
"Grrrrrr," says Mary.
"Awesome," says Sheldon.
The thing that really infuriates Mary is that there has been a housing boom in Victoria and the value of her house has increased substantially during the course of hers and Sheldon's 10-year relationship. The problem for Mary is that Sheldon did not contribute at all to the mortgage payments or pay for anything to do with the house. Yet, she has just found out that Sheldon is likely entitled to half the value of the increase in value in the house.
On top of all of this, Mary found out that Sheldon had been racking up debt on a line of credit. Now Sheldon wants her to be half responsible for that line of credit debt. Unfortunately for Mary, the law supports what Sheldon is looking for. Essentially, Sheldon is pleased. Mary, well, not so much.
Written by Val Hemminger, lawyer