Gifts and Inheritances during marriage

Property acquired by gift or inheritance, other than a matrimonial home, received during marriage from a third party are generally excluded from the division of property during separation or divorce. However, there are a few special circumstances one must be aware of when attempting to exclude the value of such items.

  1. The gift/inheritance must be traceable as at the date of separation

Money should not be mixed with other funds to be able to adequately trace back the inheritance or gift. For example, if the gift is cash, you should use a separate account to hold the cash, or purchase stock, or place money in a long-term investment.

If the money is kept in a joint account or used to purchase property under both spouses’ names, you will only be able to exclude your half of the amount, as there is a presumption that the money is jointly owned as per section 14 of the Family Law Act.

  • Using gifts/inheritance to purchase property

It is not necessary to keep the gift/inheritance in the same form it was received in.

Aside from a matrimonial home, you can use the money to purchase any property and still have the item excluded so long as it can be traced back. However, tracing the original inheritance/gift is not always clear when items are purchased in combination with other funds.

For instance, if you receive $60,000 and you use it to purchase something worth $80,000 (pay ¾ of the item with the gift money), and the value of the item increases to $90,000 at the date of separation, then you may exclude ¾ of the current value of $90,000.

  • Value

As a rule, the value of the gift/inheritance to be excluded will be calculated as the amount at the date of separation, whether the value has increased or decreased since the gift/inheritance has been obtained.

Furthermore, income from a gift/inheritance will not be excluded unless the donor/testator has specifically indicated in writing that income generated from the gift is to be included as part of the giftOtherwise, rental income from rental property, money made through interest, and stock dividends must be included in the date of separation assets.

  • Pre-Marital Gifts and Inheritance Money

For gifts acquired prior to marriage that have gained value during the marriage, the acquired value must be included in your net family property. Similar to other pre-marital assets, the pre-marriage value of a gift/inheritance will then be deducted from your net family property.

*The content on this website is not legal advice, you should always obtain advice from a lawyer with the particulars of your case.