Who Really Owns It? Navigating Family vs Excluded Property in BC

When a relationship ends, one of the first questions separating spouses often ask is: “Is this property mine alone, or do I have to share it?”

Under British Columbia’s Family Law Act (FLA), the answer depends on whether the property is classified as family property or excluded property. This distinction can make a major difference to how assets are divided after separation.

Understanding Family and Excluded Property

Under section 81 of the FLA, each spouse is generally entitled to an undivided half interest in all family property and is equally responsible for family debt, regardless of who paid for or used a particular asset.

However, section 85(1) of the FLA sets out a list of excluded property, which does not get divided equally. This includes:

  • Property owned by one spouse before the relationship began;
  • Gifts or inheritances received by one spouse from a third party;
  • Settlements or awards for personal injury; and
  • Certain types of trust or insurance proceeds.

Even though excluded property itself is not shared, any increase in its value during the relationship is considered family property and is subject to equal division unless the parties agree otherwise.

A Real-Life Example

Imagine that you have been in a relationship for only a short time. Your mother owns a property in her name. She then transfers that property into the joint names of you and your partner “for $1.00 and love and affection.” Shortly afterward, you and your partner separate.

Now you are asking:

  • Was your mother intending to make a gift to both of you, or only to you?
  • Does your partner now own half of the property?
  • Can you recover that half interest if the transfer was not meant as a gift?

Determining the Transferor’s Intention

British Columbia courts have repeatedly emphasized that intention at the time of the transfer is the key question.

When one person transfers property to another adult without payment (a gratuitous transfer), the law starts with the presumption of a resulting trust. This means that the recipient holds the property in trust for the transferor unless the recipient can prove the transferor truly intended to make a gift.

The presumption can be rebutted by showing evidence of donative intent, such as correspondence, testimony, or surrounding circumstances supporting the idea that the transfer was meant as a gift.

Applying the Family Law Act

If the evidence shows that the transfer was a gift to both spouses, then the property becomes family property and is normally divided equally.

If, however, the evidence shows that the transfer was intended as a gift only to one spouse, for example as a part of inheritance, then the property remains excluded property.

In some cases, the other spouse’s name on title does not reflect a genuine ownership interest but rather a trust arrangement, where the property is held in trust for the original owner. The court may then order the transfer back or adjust the division of property accordingly.

So What Can I Do?

  • Document intentions: If family members transfer property, record in writing whether the transfer is a gift or whether the recipient is holding it in trust
  • Keep records: Retain purchase documents, correspondence, or statements showing the source of funds or intention behind the transfer
  • Be cautious with joint title: Adding a spouse to title can have unintended legal consequences
  • Seek legal advice early: Property classification under the FLA is complex, and the burden of proving that something is excluded rests on the spouse claiming the exclusion

Need Advice?

If you are unsure whether a property transfer in your relationship is considered family property or excluded property, contact our team at Richter Trial Lawyers.

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