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Excluded Property

Property may not be shared between spouses

Updated over 9 months ago

What Is Excluded Property Under BC Family Law?

When dividing property after a separation, one of the most important legal concepts to understand is “excluded property.” In British Columbia, not everything you or your spouse own is automatically divided 50/50.

Under the Family Law Act, certain types of property are considered excluded from division, meaning the value at the time the relationship began or the property was received, typically stay with the spouse who owned them. This article explains what excluded property is, what counts, and how to record it correctly in your separation agreement.

What Is “Excluded Property”?

Excluded property refers to specific assets that don’t get shared when dividing property between spouses. This is property that one spouse brought into the relationship, or received during the relationship in a way that is protected by law.

Even though all property must be disclosed, excluded property is not divided 50/50. It usually stays with the spouse who owns it, unless the value has increased during the relationship.

Examples of Excluded Property

According to s. 85 of the Family Law Act, excluded property includes:

  • Assets owned before the relationship or marriage

    • Example: the equity in a home you owned before living together

  • Gifts or inheritances received by one spouse

    • Example: An inheritance from a parent that you kept separate

  • Personal injury settlements or awards

    • As long as they’re not meant to compensate for lost family income

  • Insurance proceeds

    • If paid to only one spouse

  • Certain trusts

    • Where one spouse is a beneficiary and did not contribute to the trust

  • Property exchanged for excluded property

    • Example: You sold your pre-marriage condo and used the funds to buy a new home. That new home may be excluded to the extent of the original value.

What’s Not Excluded: The Increase in Value

Even if a property is excluded, any increase in its value during the relationship is generally family property and can be divided.

EXAMPLE:
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You owned a condo worth $300,000 and had a mortgage of $100,000 when you moved in together (excluded equity of $200,000) This is the value of the exclusion.

Upon separation, the condo is now worth $500,000 (Family Property Value) and the mortgage has been paid down to $50,000 (equity of $450,000)

The equity today ($450,000) minus the excluded equity at the time they moved in together ($200,000) is the shared portion.

💡 This is where accurate record-keeping and proper documentation matter!

Proving Value of Excluded Property

You will need to show the value of Excluded Property. This may be easy to find in old bank

Type of Property

Helpful Documents

Gift

Gift letter, email or card confirming the gift and who it was for

Inheritance

Copy of will, estate documents, probate records, legal correspondence

Asset owned before the relationship

Purchase agreement, property deed, dated bank or investment statements, mortgage statements

Increase in value of excluded asset

Appraisals, tax assessments, statements showing original and current value

Settlement, insurance payout

Settlement agreement, court orders, insurer letters or claim documentation

Where to Look for Supporting Documents

1. Personal & Family Records

  • Ask family members if they have copies of gift letters, estate documents, or emails confirming a gift or inheritance.

  • Look through old emails, letters, or physical paperwork stored in personal files.

2. Banks & Financial Institutions

  • Request historic bank statements (usually available going back 5–7 years, sometimes longer by request).

  • If you had an investment account or RRSP, the financial institution can often provide account opening statements or year-end summaries from past years.

3. Property Records

  • Visit your local land registry or contact your real estate lawyer for:

    • Property purchase agreements

    • Title search records

    • Mortgage documents

  • Municipalities may provide past property tax assessments or refer you to an appraisal firm.

4. Appraisals & Valuations

  • If you need to establish the past and present value of something (like a home, car, or business), you can:

    • Hire an appraiser (they specialize in estimating value today and as of a specific date)

    • Use dated real estate listings or sales data from similar homes in the same area

    • Provide purchase receipts or insurance evaluations

5. Lawyers, Executors & Trustees

  • If your inheritance came through a will or estate, the executor or lawyer who handled it may still have documents.

  • For trusts, contact the trustee or law firm who manages the trust for a copy of the trust deed or statements.

Important Notes About Excluded Property

  • Documentation matters — Keep records showing when you acquired the property and where the funds came from

  • Joint Names — the exclusion applies despite any transfer of legal or beneficial ownership of the property from a spouse to the other spouse, but

  • Exclusions need to trace — you should be able to show that excluded funds were moved from one asset to another if you used excluded funds to purchase other property

  • Agreements can override exclusions — You and your spouse can agree to divide excluded property differently in your separation agreement

How to Record Excluded Property in Divii

Our Buider Tool makes it easy to identify and protect excluded property and it shows up directly in the Property Schedule:

  1. Add the item details

  2. Divii will ask: Are there any exclusions related to the item? Select Yes

  3. Enter:

    1. the Exclusion Amount, which is the amount net of liabilities, like a mortgage or loan

    2. who benefits from the exclusion

    3. the reason for the exclusion from the dropdown box

  4. the exclusion will be subtracted out from the Property Value to leave only the amount shared between you and your spouse


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