In Ontario, the Family Law Act defines matrimonial property as all property or assets acquired by either spouse between the date of marriage and the date of the separation. Within the context of a divorce, matrimonial property is subject to Ontario’s family property regime.
What is Inheritance and When is it Considered Marital Property?
An inheritance is the assets or property that you receive from a deceased person, usually as stipulated in their will (or through the laws of intestacy if there is no will). Inheritances can include:
- money
- real estate
- stocks
- personal property
- and more
An inheritance is considered “excluded” property, meaning it is not automatically subject to division between spouses during a divorce, even if it is received during the marriage. That said, there are cases in which inheritance can become classified as matrimonial property.
How Can an Inheritance Become Matrimonial Property?
An inheritance typically loses it’s protected status if it is mixed with other property. For example, if it is:
- deposited into a joint bank account
- used to purchase or improve marital assets (family home)
- used to pay off shared debts
- using an inherited home as the family residence
It’s important to understand that jurisdiction plays a key role in how assets are divided. Inheritance laws and definitions of property vary from province to province.
How to Protect Your Inheritance and Assets in a Divorce
If your objective is to protect your inherited funds or assets from becoming matrimonial property, there are a few things you must do:
- Keep the inheritance in a separate account to maintain its separate property status.
- Avoid using inheritance money for joint purposes or investments.
- Establish clear documentation, like a prenuptial agreement or marriage contract, to specify how inheritance should be treated in the event of a divorce.
- Keeping detailed financial records and document the receipt of inheritance funds and maintain proof of any transactions involving these funds.
- Consider placing the inheritance in a trust. This legal arrangement can help protect the inheritance from becoming marital property.
- Regular estate planning can ensure intentions for the inheritance are clear. This involves updating wills and other estate documents to reflect your wishes.
- Obtain gift letters from the gift giver at the time the gift is given.
Protect Your Assets and Your Rights with Alves Law
If you are going through a separation and want to make sure your inheritance and other gifts remain yours, or if you feel you’re entitled to a spouse’s inheritance, be sure to contact Alves Law. With years of experience handling various family law cases, we have the legal know-how to protect your rights and interests.
Frequently Asked Questions
How is an inheritance treated during a divorce in Ontario?
In Canada, inheritance is generally considered separate property if kept separate from matrimonial assets. If an inheritance is mixed with joint assets or used for joint expenses, it may be regarded as matrimonial property during a divorce.
