Heart Break Won’t Break Bank

//Heart Break Won’t Break Bank

Heart Break Won’t Break Bank

Heart Break Won’t Break Bank

By Don Plant, Kelowna Daily Courier

Breaking up has a whole new financial dynamic as of March 18, 2013.

The B.C. government has enacted legislation that rewrites the guidebook for couples who split. Whether you’re married or living together for more than two years, the Family Law Act and its rules about dividing assets pertain to you if the relationship crumbles.

The act revises family law in the province for the first time in 37 years. At its core is the push to get messy divorces out of the courtroom.

Paul Henry Kelowna Collaborative Divorce Lawyer

Paul Henry

“I think it’s ground-breaking legislation that will encourage people, the courts and lawyers to use ways of resolving family disputes outside of the court system,” said Kelowna lawyer Paul Henry, who chairs the Okanagan Collaborative Family Law Group.

“It creates better resolutions than the courts are able to provide.”

Once the act comes into force, a common-law relationship changes to a marriage-like relationship. Couples together for at least two years, whether they’re same-sex or straight, will have their property treated the same as if they were legally married.

If the couple shares a house, each person owns half of it when the two part ways — even if one of them bought and paid for the home before the other moved in. It’s now up to the original owner to exclude the house from the divorce settlement.

To do that, he or she must document the value of the house on the date the partner moved in.

If the house was worth $500,000 when they started living together and it’s $600,000 when they break up, the partner can only claim half the $100,000 difference.

The onus is on the spouse claiming the exemption to prove the assets he or she brought to the relationship are excluded. Those assets could be gifts, an inheritance, damage awards, insurance proceeds as well as property.

Simone Brunton

Simone Brunton

“Now you have to value the assets when you come into a marriage or common-law relationship so you can measure the growth or value over the course of the marriage,” said Simone Brunton, a chartered business valuator and senior manager at Grant Thornton.

The other partner still gets a bonus for investing in a new kitchen to increase the value of the property, or for bringing other benefits to the household. But the new act can better protect the interests of the original owner as long as he or she does some homework.

The changes make pre-nuptial agreements for married couples (or co-habitation agreements for common-law couples) more appealing. If you spell out what you’re bringing to your shared home at the beginning, there’s less room for squabbling over who gets the car if you separate.

“No one has to get a pre-nup, but it is a good idea,” said Brunton. “So if the (relationship) breaks down, you have a clear idea of what the value of the assets was at the date of marriage so you can more easily measure the growth in value.

“It’s harder to go back and value what it was 10 years ago.”

Children stand to benefit more in a divorce. Their views have to be considered when deciding their schooling, how much time they spend with each parent and who they associate with. Instead of their interest being the paramount consideration, it will be the only consideration.

Both parents will be called guardians. The obligations they have toward their kids become “parental responsibilities.” Terms like custody and access are history because they denote ownership at the exclusion of the other parent.

“It’s a new language. The time each parent spends with children is called ‘parenting time,'” said Henry. “The same sort of decisions will have to be made, but instead of saying one parent has more power than another, it divides parents’ responsibilities.

“It’s a paradigm shift from setting two parents against each other.”

The spirit of the new act encourages people to make their own agreements about family property and children so the courts honour them. There’s greater opportunity for mediators and family arbitrators to draw up alternative dispute resolutions, the new buzzword in family law.

Someone starting a second marriage usually has more assets. If there’s family money, a pre-nuptial agreement can help other stakeholders, like adult children who want to protect their inheritance, Henry said.

“It provides certainty. Under current law, the starting point is all the family assets are equally divided. But if equal division is unfair, a court can disproportionately divide them,” he said. “Court is always more costly.”

The new law cuts both ways, however. Both parties are responsible for the debts they incur in the relationship. There are exceptions, like a spouse who becomes a chronic gambler.

The updated rules even pertain to common-law couples who are currently together for less than two years. Their move-in date could be March 19, 2011 and the law still applies, Henry said.

Courtesy The Daily Courier (Kelowna),  Friday March 8th, 2013

© 2013 The Okanagan Valley Newspaper Group. All rights reserved.

2016-12-26T19:26:25+00:00