The Family Law Act, section 85 states that excluded property (i.e. property that an individual can keep as their separate property which is not subject to division) includes a settlement or an award for damages to a spouse as compensation for injury or loss unless the settlement is for lost income:
Excluded property
85 (1) The following is excluded from family property:
(a) property acquired by a spouse before the relationship between the spouses began;
(b) inheritances to a spouse;
(b.1) gifts to a spouse from a third party;
(c) a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for
(i) loss to both spouses, or
(ii) lost income of a spouse;
Before the new Family Law Act was enacted, case law stated that a person could keep as their separate property a settlement except for compensation for past wage loss. Now it appears that it may be for past and/or future wage loss. This doesn’t make any logical sense as only the compensation for past wage loss is relevant to the marriage and one would think that a person should be able to keep their future wage loss to support themselves and/or to support their children. Until there are some judicial decisions we won’t know how the courts will interpret section 85(1)(c)(ii).
