A common question in divorce or separation is whether an inheritance can be claimed by an ex-spouse. People are also concerned about whether they can protect financial or property gifts received from their parents during their parent’s lifetimes, which can sometimes, but not always, be considered an inheritance in advance.
In British Columbia, inheritances and gifts from third parties are considered excluded property. Excluded property is property that is not shared on divorce. The relevant statutory provision is section 85 of the Family Law Act, here).
However, although inheritances and gifts are excluded, there are a number of circumstances where parties have been found to have lost an exclusion that would have otherwise have had. This means that because of something that was done, or not done, an inheritance or third party gift had to be shared on divorce or separation.
Examples of facts that have resulting in a lost exclusion include: putting the property into the other parties name, putting it into joint names, paying down a mortgage on the family home, or depositing into a joint account or otherwise intermingling it with shared assets. An exclusion can also be found to have never existed if a judge decides that a gift was intended for both spouses, not only the spouse from whose immediate family the gift came.
Ideally, to protect an inheritance or a gift from future division in a divorce or separation, you should talk to property division lawyer Sabrina Yeudall before the gift is made. This is because documentation of intent at the time the gift is made is the best evidence that sharing of the inheritance was not intended. This might be as simple as a notarized letter clarifying everyone’s expectations and intentions and can be relatively easy and inexpensive to create.
What intent existed at the time the gift was made, and can be proven,
will be extremely influential on the final determination
should the issue be determined in a courtroom.
If you find yourself facing divorce or legal separation and the inheritance is already received or the gift has already been made, you should get legal advice from an experienced divorce lawyer as soon as possible to determine how to get the best possible evidence to minimize the possibility that your exclusion has been lost, or discuss ways to negotiate around a lost exclusion to reach a fair agreement notwithstanding a case that might have reached a conclusion unfavourable to you.
