Family Lawyers Helping Separated and Divorced Clients with Inheritance Issues
Questions about how marriage affects an inheritance are common. Clients who are the recipients of an inheritance are often curious about whether the inheritance will be protected from their spouse in the event of a separation or divorce. Other clients wonder whether they would be entitled to their spouse’s inheritance in the same situation. Division of property in family law is itself a very complex endeavour, let alone the division of property where an inheritance is involved. In order to protect yourself and your assets, or to ensure you obtain what you may be legally entitled to, it is critical to get knowledgeable legal advice as early as possible.
At Gelman & Associates, we have provided legal assistance to clients on either side of the inheritance coin: those who seek to protect their inheritance and those looking to access their spouse’s. We have significant experience advising clients on division of property, understand how inheritances have been addressed by courts in the past, and use this deep knowledge base to guide clients through this challenging area of the law.
Ensure you get to keep gifts and inheritances during a divorce by reading this blog post.
Know How to Protect Your Gifts & InheritancesExcluding an Inheritance from the Equalization Process
In Ontario, married couples who divorce will go through an equalization process, which essentially divides the couple’s total property value in half – but in most circumstances, pursuant to section 4(2) of the Family Law Act, an inheritance can be an excluded from equalization.
If an inheritance is received before the marriage, it is not included in the division of assets at the time of divorce. If an inheritance is received after the marriage, whether it will be included in the division of assets will depend on the treatment of the inheritance.
In order for the inheritance to be considered an exclusion under section 4(2), the inheritance must be identifiable and traceable. Real property (i.e. a cottage, boat, piece of art, etc.) is easily identifiable and automatically excluded. Similarly, funds that go into (and stay in) a savings account in the inheritor’s name are readily identifiable and traceable. In contrast, funds that have been put into a joint account and used to benefit the family’s lifestyle can be difficult to trace and exclude. For instance, an inheritance used to fund family vacations or similar may be more difficult to exclude.
Although Ontario laws generally protect an inheritance received after the time of marriage, it does not fully protect financial gains such as property purchased with the inheritance, or growth due to interest on the inheritance.
How to Protect Your Inheritance
How to Endanger Your Inheritance
Contractual Agreements regarding Inheritance
The law in Ontario allows couples to make contractual arrangements that could change how an inheritance is handled. These are referred to as either a pre-nuptial agreement (a contract entered into before marriage), a cohabitation agreement (a contract entered by cohabitating spouses that may end up getting married in the future), or a marriage contract (an agreement between a married couple). If one of these domestic agreements is in place, the treatment of your inheritance will be subject to the terms of the domestic agreement.
Contact our Family Law Lawyers in Aurora, Barrie, Downtown Toronto, Mississauga, North York and Scarborough for Advice on How to Protect your Inheritance
The best time to get advice on how to protect your inheritance is as soon as you know you may receive one (or as soon as you receive it). Even if you are not separated or divorced, our team of knowledgeable family lawyers can advise you how you can best protect your inheritance from future uncertainty. And if you are going through a divorce, we will fight for your best interests. Call us at (416) 736-0200 or 1-844-736-2022 or contact us online to see how we can help.
FAQ’s:
FAQ: INHERITANCES
When you separate or divorce, you could be forced to share the inheritance with your spouse if you are not careful with what you do with it. As long as you received your inheritance during the marriage, you can exclude the value of the inheritance you left on the date of separation from your net family property.
If you are legally divorced, then most likely, the division of all of your assets and debts occurred at the time of divorce, your ex spouse would have no right to property acquired after the divorce, including inherited money or personal property received after the divorce.
Future inheritances are not taken into account when dealing with the financial aspects of a divorce, but if it is expected that the person making the bequest will die in the near future, and if the inheritance is likely to be substantial, it may be.
