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Understanding Inheritance Rights in Ontario: Exclusions, Tracing, and More




woman signing a contract as another woman looks on

In Ontario, property division is typically split equally between both parties when a marriage ends. However, there are a few exceptions to this general rule. For instance, the value of any gifts or inheritances you or your partner received during the marriage is excluded from the division of property when you separate.


Keep it Separate

It's important to note that in order for the exclusion to be made to the general rule regarding property division during a divorce, the spouse making a claim must be able to prove that any gifts or inheritance they received during the course of the marriage are still in their possession at the time of separation. This is sometimes referred to as being "traceable." The easiest way to ensure that the gift or inheritance can be traced is to keep it in a separate account, separate from any shared accounts that were used during the marriage.


Things to consider when you receive a gift or inheritance during marriage

1.       It's important to remember that a gift or inheritance should never be used towards the purchase of the matrimonial home. Similarly, if you inherit or are gifted a home, it's best not to move into it as your matrimonial home. This is because the matrimonial home is treated differently than other forms of property under the law.

 

In a very short and simplified way, the value of the matrimonial home is always shared between spouses unless there is a valid domestic contract stating otherwise.

 

Therefore, if you decide to use a gift or inheritance to pay for a down payment on a matrimonial home, a home line of credit, or renovations to your home, you will no longer be able to claim the exclusion of the value of the gift or inheritance.

 

2.       It is essential to ensure that the value or amount received as a gift or inheritance is kept separate and traceable at all times. However, it is not necessary to maintain it in its original form. This means you can use the gift or inheritance to purchase property or other goods if you can trace the right to the good back to the original gift or inheritance.


3. If a spouse received a gift or inheritance before the date of marriage, it is not given the same special status as those received after marriage. In such a scenario, the value of the gift or inheritance will be included in the spouse's net family property since no special treatment is prescribed for gifts or inheritance received before the date of marriage. Therefore, like any other asset, the value of the gift or inheritance will be deducted from the spouse's net family property.


If you have any questions regarding the status of a gift or inheritance received before or during marriage, please don't hesitate to contact us at 905-215-1905. We are happy to assist you with all your family law concerns.

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