Ontario’s Family Law Act (FLA) regulates the rights of spouses and dependants with regard to property, support, inheritance, prenuptial agreements, separation agreements, and other matters of family law.
Under section 7(1) of the FLA, either spouse can, upon divorce or separation, apply for a determination of the spouse’s entitlement under the equalization of net family property.
The matrimonial home is afforded special treatment under Part 2 of the FLA: what it is, how it is treated in the equalization process, and who has a right to possess it. For many couples, the matrimonial home represents the largest and most significant asset, and it is also a place of great personal importance. Couples need to properly understand how their home is treated under the law. At HNPC, we explain the legal “in’s and out’s”, and provide guidance on handling this critical matter.
Drilling down – Managing an inheritance
The wording in a benefactor’s will is critical. Based on FLA regulations, it must stipulate what the gift is that the benefactor is leaving the beneficiary, whether that recipient be a child, an adult, an immediate family member, a distant relative, a personal friend… whomever.
If you’re lucky enough to be the beneficiary, you can decide how to manage the gift you receive. If you inherit money, and never spend that money, but instead leave it in a bank account, or use the money to independently invest, outside the legal arrangement of your marriage or partnership, it belongs solely to you. It remains your individual property, other than perhaps the income it generates if you use the money for joint family purposes.
But… If along the way you dip into your inheritance to pay hydro, gas water and food bills every month (and who doesn’t?), or invest it in the matrimonial home, that money is spent. It cannot be reclaimed as part of your inheritance.
The value of any inheritance that you or your partner receive during your marriage or legal partnership is theoretically excluded from the division of property upon separation or divorce. However… you have to treat those gifts or inherited items in a specific manner in order to take advantage of that exclusion.
At Howard Nightingale Professional Corporation, our team is available to provide you with more details about this, and guide you on how to protect your inheritance in the event of separation or divorce. We’re here to help put your mind at ease.
Please reach out to us for assistance at our Toronto office at 416-663-4423 or toll free at 1-877- 224-8225.