Can Your Spouse Take Your Inheritance in a Divorce?

For the most part, property gained during a marriage must be split equally when a couple separates.  You can think of a married couple as one joint financial unit, from the date of marriage to the date of separation. When a couple gets married, their spouse is automatically entitled to an equal share of property and assets gained during the marriage. This includes the value of the family home, even if it was purchased by only one spouse prior to the marriage.  

When the couple separates, or one of them dies, the other becomes eligible to divide the property the couple gained during the marriage, as well as the increase in the value of property owned by one spouse before the date of marriage. This process is called “equalization”.  

Many people wonder whether an inheritance they have received will be caught up and divided in the equalization process.  

Ontario family law treats inheritances and gifts received during the marriage as an exemption and they are excluded from the equalization process.  

When calculating the property and assets of the marriage to be divided, inheritances and gifts are kept separate and stay with the receiving spouse.  HOWEVER, in order for the gift or inheritance to be excluded, the receiving spouse must be careful about how they use it.  The receiving spouse must keep the inheritance or gift separate from other property and it must still exist on the date of separation.  For example, if the inheritance or gift were deposited in a joint account from which the parties deposit and withdraw other money, it will no longer be considered separate at the date of separation.  If the receiving spouse were to purchase a family home or use it to pay off the mortgage, it will no longer exist at the date of separationAs well, it must be clear that a gift received during the marriage was only intended for the receiving spouse, not the couple.  The person gifting to one spouse must clearly express that they intend the gift only be received by one spouse.     

An inheritance or gift that no longer exists at the date of separation may still be excluded if it can be traced to property that does exist.  In order to ensure your assets are protected, it is very important that you hire a family law lawyer who knows the law when it comes to inheritances and gifts.  

To find out more about your rights during a divorce or separation, call MILLARS LAWYERS today at 519-657-1LAW and schedule a free consultation with our experienced family law lawyer.

By: Janessa Plaine

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