What happens if a spouse sells, spends, or otherwise depletes assets after separation? Property division in divorce cases can be challenging. It’s even more difficult when one or both spouses doesn’t play fair.
In today’s post, our British Columbia family lawyer will discuss assets division, including whether a spouse can sell assets before divorce and steps a spouse can take to protect themselves when it comes to property division in divorce.
If you suspect your spouse is selling, transferring, or spending assets post-separation, we strongly recommend that you reach out to our New Westminster family law firm for legal advice as soon as possible.
Property division in divorce – The Basics
In British Columbia, the Family Law Act governs how property is divided when married couples or common-law spouses separate. These laws focus on ensuring that couples leave the marriage or relationship on relatively equal footing.
When spouses separate, all family property and all family debt will be divided 50/50, unless the spouses have an agreement that states otherwise or a judge orders otherwise. Family property is everything you or your spouse owned separately or together on the date you separate. Family debt is anything you or your spouse owe separately or together.
Can my spouse sell assets during the divorce process?
Your spouse is not allowed to sell jointly held assets or property after separation without your consent or a court order. For example, if you have a joint bank account, your spouse is presumptively entitled to half of its balance at the date of separation but he or she not allowed to spend more than their half during the divorce.
Your spouse can sell, transfer, or spend their share of jointly owned assets, and any assets that are in his or her sole name (other than the family residence – see below for more on that), but your spouse will need to account for the value of any such assets or property derived from such assets in the divorce proceedings.
Rules for real estate in divorce
Real estate division is also protected in the divorce process. Your spouse is not allowed to sell jointly owned real estate without your consent or a court order. The protections are even stronger if the property in question is your family residence (i.e., the place where you and your spouse ordinarily reside). Your spouse is not allowed to sell or transfer the family residence without your consent or a court order—even if your name is not on title to the property.
What if my spouse isn’t playing fair?
Unfortunately, people don’t always play by the rules. If your spouse depletes assets, improperly sells or transfers property, recklessly spends money or takes on large debt after separation, there are steps you can take to protect yourself and your right to fair assets division.
The recommended first step is to get legal advice from an experienced lawyer. Our British Columbia high net worth divorce attorney can explain your legal options and take necessary action on your behalf. Whether you have a relatively modest amount of family property to be divided or you are going through a high asset divorce, British Columbia family lawyer Valerie M. Little can guide you and protect your interests.
If you have not yet started a family law case, that will usually be the next step. Once you file a Notice of Family Claim, you can ask the court to make temporary orders to protect and preserve property. For example:
Section 91 of the Family Law Act allows a spouse to apply to court for a protection order prohibiting your spouse from selling, encumbering, or otherwise dealing with family property.
Section 91 also gives the BC Supreme Court the power to order the possession, safekeeping, and preservation of property.
The court can make temporary orders respecting the family residence. You can bring an application under section 90 of the Family Law Act asking the court for exclusive occupation of the family residence.
You can seek a protection order if your spouse is threatening to hurt you or damage property.
If you want to have property sold to prevent it from being depleted, an application can be brought for an order that the property be sold on an interim basis. Rule 15-8 of BC’s Supreme Court Family Rules gives the court discretion to order the sale of property and the court also has the power to fix the sale price, appoint a real estate agent, etc. if you and your spouse are not able to agree.
It's important to act quickly to get temporary orders in place. If you wait too long, there may not be enough assets left you to recover the value of what your spouse spent, sold, or otherwise depleted.
Unequal asset division
As noted, the usual rule is that family property and family debt are divided equally in a divorce. That being said, BC courts have the power to order unequal division. Section 95 of the Family Law Act gives the court the discretion to order unequal division but only if it would be “significantly unfair” to equally divide family property or family debt.
The “significant unfairness” threshold is high and it is not easy to prove to the court that re-apportionment should be ordered. These are some of the factors to be considered where a spouse requests unequal division:
whether debt was incurred in the normal course of the spouses’ relationship (as opposed to a gambling debt or reckless spending by one spouse, for example);
actions taken by a spouse after the date of separation that have caused a significant increase or decrease in the value of the family property or debt, beyond market trends;
the fact that a spouse, other than a spouse acting in good faith, did something to substantially reduce the value of family property;
the fact that one spouse disposed of, transferred, or converted property that would otherwise have been family property, causing the other spouse's interest in that property to be defeated or adversely affected.
So, if your spouse has inappropriately spent, sold, or depleted assets, you can ask the court to remedy that by ordering unequal division of family property in your favour.
Assets Division and High Asset Divorce British Columbia
Dealing with the various legal aspects of a divorce can be stressful. Fortunately, the team at Valerie M. Little Law Corporation can make the process easier by providing invaluable information, advice and support to assist you. Our British Columbia family lawyer has helped countless clients with divorce assets division and related legal issues following the termination of their relationship.
Valerie M. Little Law Corporation is a family law firm that is centrally located in New Westminster and serves the surrounding areas of Burnaby, Maple Ridge, Coquitlam, Port Coquitlam, Vancouver, North Vancouver, West Vancouver, Port Moody, Richmond, Surrey, Cloverdale, Delta, and Langley. To schedule your confidential appointment, call 604-526-3333 or email us.