Valuation Dates for Family Property

by Cristen Gleeson with Lauren Kempers

Understanding Family Property Valuation

What value do we assign to family property upon the break-up of a marriage? This issue can be a hot-bed of dispute. At the end of a marriage, all property acquired by spouses throughout their marriage must be divided and, in the large majority of cases, will be is divided equally. Family property can include anything from real estate, business interests or general belongings. One question that arises during the division of family property is how the value of family property is determined.

Under section 87 of the Family Law Act, the golden rule for family property valuation is the fair market value as of the “current date.” In this context, “current date” means the date of final determination of the issue of division of property, normally the date of a signed separation agreement or a trial date.

When Can a Different Valuation Date Be Used?

However, if one spouse seeks to use a valuation date other than the current date, the only factor that a court can consider is whether it is significantly unfair to order a current date valuation. Meaning essentially if a valuation date other than the current date is used, it would result in one spouse benefiting from a change in value of the family property. This becomes very problematic in cases of real estate shared between former spouses. 

The following example provides further context to this issue. Say there are two spouses (referred to as Spouse One and Spouse Two) who together own a home that they bought during their marriage. The spouses decide to separate in 2017, and at this time their home is worth $800,000. Upon separation each spouse is entitled to an equal share of the value of the home. Spouse One decides they want to keep the former family home for themselves. To do so, Spouse One must purchase Spouse Two’s share of the home. Through the course of legal proceedings, the spouses proceed to trial in 2023. From 2017 to 2023 their former family home increases in value to $1.2 million. If at trial the value of the former family home is deemed to be $800,000 as it was in 2017, then Spouse One would only have to pay $400,000 to purchase Spouse Two’s interest in the home. As a result, Spouse One would end up solely benefitting from the increase in value of the home from 2017 to 2023, and Spouse Two would receive a less than equal share of the current value of the home.

A spouse wishing to use a different valuation date must meet a very high threshold to prove that a current date valuation is significantly unfair. In considering whether to order this type of unequal division of property, judges may consider a variety of factors, including the following as set out in section 95 of the Family Law Act:

1. the duration of the relationship between the spouses;
2. the terms of any agreement between the spouses;
3. a spouse’s contribution to the career or career potential of the other spouse;
4. whether family debt was incurred in the normal course of the relationship between the spouses;
5. if the amount of family debt exceeds the value of family property, and the ability of each spouse to pay a share of the family debt;
6. whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;
7. the fact that a spouse, other than a spouse acting in good faith,
   1. substantially reduced the value of family property, or
   2. disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse’s interest in the property or family property to be defeated or adversely affected;
8. a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order; and
9. any other factor that may lead to significant unfairness.

In the large majority of cases, spouses that argue for a different valuation date for family property are not successful. Only in rare cases have the courts deviated from the date of final determination of the division of family property as the valuation date. One example of the successful use of a different valuation date other than the “current date” occurred in Fawbert v Fawbert, 2022 BCCA 370, where a different date was used due to the property in question having been sold prior to the date of trial. In another example, Slavenova v Ranguelov, 2015 BCSC 79, a different valuation date was used because one spouse was solely responsible for the preservation and maintenance of the family property and the reduction of the family debt because the other spouse fled the country after separation. 

Overall, the golden rule for family property valuation being the “current date” is strong. Separating spouses should be aware that the value of their family property may fluctuate after separation through no effort (or fault) of either spouse, and that each spouse is entitled to an equal share in the market value increases or decreases of family property until the issues of property division are determined.

Need Assistance with Family Property Valuation?​​

At Baker Newby, our experienced family law team is here to help you navigate complex property division issues. If you’re facing a divorce or separation and need guidance on family property valuation, contact us today for a consultation!