Want to Keep Your Ex Away from Your Inheritance? It’s Simple.

In a recent article in The Wall Street Journal titled “How to Keep Your Inheritance in a Divorce”, the author outlines a few tips on how an inheritance received by one spouse before or during marriage might be rendered safe from equal division in favour of the other spouse, in the event that they later divorce.

Although that article was written from the U.S. perspective (and indeed the author makes a point of noting that the laws do vary by state), some of the points are equally valid to Ontario law.  However, some of the author’s tips – while helpful in a general sense – are effectively moot because the law is comparative simple in this province.

Here are the basics:

1) Ontario Family Law already addresses inheritances

In one of our most popular Blog posts, I wrote about how inheritances are dealt with in a divorce, and pointed out that the Ontario Family Law Act already covers the topic – by expressly stating that: a) inheritances received before marriage deductible from assets subject to equalization, and inheritances received during marriage are also specifically excluded from Net Family Property.  (Although any income from that inheritance is only excluded in certain circumstances).

2) Domestic contracts can also be the answer  

Even though the provincial legislation already deals with inheritances, the outcomes described above are based on a presumption:   that you and your spouse have not entered into a domestic contract that purports to deal with how inheritances are to be treated between you.    In Ontario, domestic contracts (such as a pre-nuptial agreement or marriage contract) are actually the best way for couples to turn their mind to and agree on how specific assets are to be dealt with, and these can override the legislation in most cases.  Although these private agreements are not always iron-clad (especially if they are poorly drafted without the help of a lawyer), they serve to embody each spouse’s intentions and expectations around many of the marital assets, including inherited money and goods.

Inheritances are just one type of the more “sentimental” category of assets – which include family cottages, heirlooms, and gifts from relatives.  In a future blog I will provide some tips on how these other family assets can be dealt with upon divorce.

Do you have questions about inheritances or domestics contracts generally?  Contact us for a consultation.