How to divide property and debts

The rules about how to divide property and debt apply to both:

  • married couples, and
  • couples who have lived together in a marriage-like relationship for at least two years (some people call this a common-law relationship).

The law calls both of these kinds of couples spouses.

On this page:

How is family property and family debt divided?

After you separate, the law says that all family property and family debt must be divided equally between you and your spouse, unless you have an agreement that says you'll divide them differently.

Tip: For information on drafting a legally binding separation agreement, see our self-help guide How to write your own separation agreement.

What is family property?

Family property is everything either you or your spouse own together or separately on the date you separate. It includes:

  • the family home
  • RRSPs
  • investments
  • bank accounts
  • insurance policies
  • pensions
  • an interest in a business

It doesn't matter whose name the property is in.

See section 84 of the Family Law Act for more about what counts as family property.

What about property one of us owned before we got together?

Property one of you owned before you got together isn't included in family property. This is called excluded property. That means you don't split the value of it equally if you separate or divorce. However, if the property increases in value while you live together, the increase is considered family property. You must divide the increased value.

So, for example, let's say you owned a house when you started living together. Your spouse wouldn't be entitled to an equal share of the house's total value after you separate. But your spouse would be entitled to half of the increase in the house's value since you started living together.

Excluded property also includes property bought with excluded property. For example, if you owned a condominium before you got married and sold it to buy the family home after you got married, you can "trace" the value of the excluded property (the condominium) that went towards the new family property. You don't have to share this portion.

What else is excluded property?

Other types of excluded property include any other assets that each of you owned before the relationship started, as well as gifts and inheritances received by one spouse. See section 85 of the Family Law Act for a full list of what is considered excluded property.

Remember though, that even if you own something that is considered excluded property, you must share equally any increase in its value that happened while you were together.

What if my spouse gave me the excluded property?

Recent court decisions about dividing property have complicated this area. If one spouse mixes excluded and joint property or puts excluded property into the other spouse's name, it could become family property.

For example, say one spouse receives an inheritance of $100,000. They use that $100,000 to pay down a mortgage on property held jointly by both spouses. Depending on the circumstances, a court might find that the $100,000 was a gift from one spouse to the other, so it's now family property.

Another common example is if one spouse's parents give their child money for a down payment on a house owned jointly by both spouses. Even if the parents clearly intended their gift for only their child, a court might find that putting the money into a house they both own makes it a gift from one spouse to the other. This means it becomes family property.

The only way to be certain that any inheritance, gift from relatives, or other excluded property (like pre-relationship savings) put into property bought during the relationship remains excluded property is if it's recorded in a written agreement.

Because this can get complicated, you may need to get some legal advice.

What is family debt?

Family debt includes all debts either spouse took on during the relationship. This includes:

  • mortgages
  • loans from family members
  • bank lines of credit or overdrafts
  • credit cards
  • income tax
  • repair costs

Family debt also includes debts taken on after separation if the money was spent to take care of family property.

It doesn't matter whose name the debt is in. Both spouses are equally responsible for family debt, whether they are married or in a common-law relationship.

See section 86 of the Family Law Act for more about what counts as family debt.

Can creditors force me to pay back my ex-spouse's debts?

Creditors — those you owe money to — can collect payment only from the person who took on (signed for) the debt. If a couple has joint debts, creditors may choose to collect payment from only one person.

If you've separated, tell all your creditors in writing that you're no longer with your spouse, and:

  • Cancel any secondary credit cards.
  • Talk to your bank about any joint accounts you have.
  • Reduce limits on overdrafts and credit lines to what you owe now, or see if the account can be changed to require two signatures to withdraw money.
  • If you need credit, ask the bank to open a line of credit in your name only.
  • Change the beneficiary of your investments, RRSPs, insurance, and will, if your spouse is the beneficiary.

This can get complicated. You may need to get some legal advice.

Is unequal division of family property and debt possible?

A court will order that family property and debt be divided unequally only if it would be "significantly unfair" to divide it equally. Some of the things the court will consider when deciding this include:

  • how long your relationship lasted;
  • if the two of you made any agreements other than written agreements that were signed and witnessed;
  • how much each of you contributed to the other spouse's career or career potential;
  • how the family got into debt;
  • if your family debt is worth more than the family property,
  • each spouse's ability to pay a share of that debt; and
  • if one spouse did something to raise or lower the family debt or property value after the separation.

See section 95 of the Family Law Act for more about unequal division of property and debt.

Are there time limits to settle family property or debt?

If you were married spouses, you must apply to divide family property or debt no later than two years after you get an order for divorce or annulment. If you were unmarried spouses, you must apply within two years of the date on which you separated.

For more information on this subject, see:

Our fact sheets Dealing with debts after separation (for married and common-law couples) and Separation: Protecting yourself financially

Protecting Property & Debt in Family Law Matters on the JP Boyd on Family Law website.

Tax Matters Toolkit (Canadian Bar Association)
Two-part online resource that explains the tax rules that apply when you separate or divorce. Topics include spousal and child support, pensions, RRSPs and RRIFs, and child benefits, deductions, and credits. Includes many links to general resources and government forms.

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