Inheritance and Divorce in British Columbia |Zukerman Law

Navigating Inheritance and Divorce in British Columbia: Protecting Your Legacy

Inheriting valuable assets can significantly impact your life, bringing financial blessings and potentially complicating existing relationships. When navigating both marriage and the unexpected windfall of an inheritance, questions about ownership and potential division upon divorce naturally arise. This blog aims to clarify your rights and responsibilities regarding inheritance in British Columbia, specifically within the jurisdictions of Surrey, South Surrey, Langley, and White Rock.

 

Inheritance and Divorce in Canada

Inheritance and Divorce in Canada

Even after divorce, inherited assets generally remain separate property. However, exceptions exist if inheritance terms mention your ex-spouse or the inheritance significantly altered one partner’s financial situation, potentially impacting child support or spousal support agreements.

Inheritances and gifts are generally safe from division upon separation or divorce. This means they remain your separate property, thanks to Section 85 of the Family Law Act.

But hold on, there’s a twist: specific actions can jeopardize this protection. Let’s explore how you might accidentally share your inheritance even though it was meant to be yours alone.

  • Mixing Money Makes a Mess: Blending inherited funds with joint accounts or using them for shared expenses can blur the lines. Suddenly, your separate property starts looking like marital property, putting its future ownership at risk in a divorce.
  • Intention Matters: Courts examine your actions and intentions regarding the inheritance. Keeping it separate for personal needs strengthens its protected status. But using it heavily for family assets weakens that defense.
  • Be Clear: If you want to separate your inheritance, avoid commingling. Treat it like a unique possession, and document your intentions.

While complete protection during marriage might be challenging, proactive measures can minimize commingling and clarify your intentions. Consulting Zukerman Law can help draft a prenuptial or cohabitation agreement outlining inheritance ownership and management.

 

Is My Spouse Entitled to My Inheritance When We Get Divorced?

Is My Spouse Entitled to My Inheritance When We Get Divorced?

This nuanced question requires understanding BC’s distinction between separate and marital property. Generally, your inheritance falls under separate property, meaning it remains yours even after divorce unless certain conditions are met.

You will find a more complete answer to this question below.

When Can Inheritance Become Marital Property?

  • Commingling Funds: If you intermingle inherited funds with joint accounts or use them for shared expenses and investments, they could be deemed partially or even entirely marital property, subject to division during divorce.
  • Intention and Contribution: Courts consider your intention and actions regarding the inheritance. Using it solely for personal expenses likely maintains its separate status while contributing significantly to family assets, strengthens the argument for marital property classification.

Cautionary Examples: Actions Leading to Lost Exclusion

  • Transferring ownership: Placing the inheritance in your spouse’s name or jointly weakens its exclusion. This grants them a share, regardless of your initial intentions.
  • Mortgage reduction: Utilizing inherited funds to pay the family home mortgage can complicate matters. Courts might interpret this as contributing to a shared asset, impacting its separate classification.
  • Joint accounts and commingling: Depositing inherited funds into joint accounts or using them for shared expenses significantly weakens its status as excluded property. Courts might view this as evidence of intentional commingling, leading to potential division upon separation.
  • Gifts with ambiguous intent: While gifts from one partner’s family typically qualify as excluded property for that partner, judges retain discretion. The exclusion could only be recovered if a judge deems the gift intended for both spouses.

Can My Husband Get Any Of My Inheritance?

Inheriting assets during marriage generally merges them with marital property, potentially subject to division in a divorce. However, pre-marital inheritances and those kept separate (separate accounts, individual investments) remain yours. You can only control your inheritance separately from your marital property by keeping it in a different account or investing it in assets in your name only.

Seek legal advice and consider prenuptial or postnuptial agreements for added clarity and protection of your inheritance in specific situations.

Maintaining meticulous financial records and avoiding commingling are crucial to protecting your inheritance. Consulting a Zukerman Law can offer invaluable guidance. Exploring options like prenuptial or cohabitation agreements explicitly outlining inheritance ownership and management strategies can provide additional peace of mind.

 

How to Protect Inheritance from Spouses in Canada?

How to Protect Inheritance from Spouses in Canada?

Inheriting valuable assets during marriage brings joy yet raises questions about their status upon potential separation. While British Columbia law generally protects “excluded property” like inheritances, proactive measures are crucial to maintain this distinction throughout the relationship.

  1.  Refrain from transferring inherited assets into your spouse’s name, even with amicable intentions. This action can inadvertently create a shared ownership claim.
  2.  While transferring excluded property (like inheritances) to your spouse’s name is generally not recommended, if such a situation arises, it’s crucial to secure a written agreement. This agreement should explicitly state that the property remains yours despite the title change and outline the justification for transferring ownership. This documentation is vital evidence should your separate property require protection during legal proceedings.
  3.  Resist the urge to utilize inherited funds for shared expenses or joint investments, such as family homes. Such commingling may blur the lines of ownership, potentially subjecting the inheritance to division during separation.
  4.  Maintain meticulous financial records documenting the source and application of inherited funds, highlighting their distinct nature from marital assets.

Establish a dedicated bank account solely for inherited savings, separate from accounts used for shared household expenses. This clear segregation strengthens the case for its exclusion upon separation.