According to a recent Globe and Mail report, over 80% of Canadians anticipate receiving inheritances from their parents one day. Many expect them to be worth six figures, even following a divorce. If you’re married and have already received an inheritance or suspect you might secure one soon, read on to learn the answer to the question, “Can inheritance money be divided in a divorce in Canada?”
Inheritance Money Is Usually Not Included in the Property Division Process During Canadian Divorces
Good news: While the answer to the question, “Can inheritance money be divided in a divorce in Canada?” is technically “yes,” you won’t typically have to worry about giving a portion of it to your spouse if you ever split.
Many provinces in Canada have property division processes in place to help divorcing spouses divide their assets fairly. In British Columbia, the Family Law Act calls for the equitable distribution of marital assets. These often include homes, vehicles, cash from bank accounts, funds invested in retirement and estate planning accounts, and more.
However, certain assets are excluded from the division of property in BC. Here are several common examples of exempt assets:
- Assets you owned before marrying your spouse
- Gifts you received during your marriage
- Proceeds from personal injury lawsuit settlements or judgments
Generally speaking, any inheritance money you may have received before or during your marriage is also considered separate property. Because of this, you do not need to include it among family assets and subject it to property division.
There Are Exceptions to This Rule
Although you will be glad to know that inheritance money isn’t usually divided in a divorce in Canada, exceptions do exist. Here are a few to have on your radar:
- You placed an inheritance into a joint bank account and combined it with your and your spouse’s money.
- You used all or part of it to purchase a matrimonial home or cover any related joint expenses (repairs, upkeep, etc.).
- You allowed it to increase in value by investing it.
In these cases, your inheritance money might lose its protected status. You may have no choice but to include it in the property division process. An experienced legal professional can help clarify these terms and more.
You Can Take Steps To Avoid Losing Inheritance Money During a Divorce in Canada
Those forced to divide inheritances in the past have set a legal precedent for Canadian divorces. With this in mind, you should consider taking steps to avoid losing your inheritance in a divorce, even if you don’t currently have any plans to seek one from your spouse.
You may prevent your inherited funds from turning into a marital asset by doing the following:
- Placing money into a personal bank account as opposed to a joint account
- Steering clear of using it to buy anything that could be considered joint marital property later
- Signing a prenuptial or postnuptial agreement outlining how you will deal with inheritances during a divorce
A reliable attorney can offer assistance as you take one or more of these steps. They will also provide the necessary services throughout the divorce to pursue a fair resolution.
Allow Our Divorce Attorneys To Help You Navigate the Property Division Process
“Can inheritance money be divided in a divorce in Canada?” is one of the many questions you may have when seeking a divorce. Let the trusted Pier Law & Mediation team answer all your questions to prepare you for your upcoming legal proceedings.
Reach out to us at 604-560-8285 or complete this form to schedule a consultation.
