What Happens To Your Inheritances and Gifts in Your Separation and Divorce?

What You To Know About Your Inheritances and Gifts In Your Separation or Divorce!

Let’s be honest.  If you get an inheritance during your marriage from a family member or friend, you certainly want to keep it.

That’s why this question from a client is not surprising.   My client asked me recently, “Do I have to split or share my inheritance with my spouse now that we are separating?”

When you are trying to figure out your property claims in your separation or divorce, you must calculate your net worth on your date of separation.  Your net worth is the value of your assets minus the amount of your debts on the date of separation.

Fortunately, an inheritance is excluded from this calculation when you received this inheritance after the date of the marriage.

However, you could still face some problems with the inheritance exclusion.  If you put the inheritance money into buying the matrimonial home or use the money to pay down the mortgage, then you cannot legally exclude the inheritance.

If you deposited the inheritance money into joint bank account with your spouse, the court will usually find that each spouse is entitled to 50% of the money.

Here’s the bottom line about inheritances you get after the date of marriage: you must keep this money separate from any jointly-owned property or joint bank accounts or you cannot exclude this inheritance.

If you received the inheritance before the date of marriage, you can exclude this amount from the calculation of your net worth on the date of separation.  However, you have to account for the increase in value of the inheritance during the marriage.

For example, let’s say you get an inheritance of $100,000 before the date of marriage and you invest this amount in stocks and bonds.   If these investments increase in value to $300,000 by the date of separation, you can exclude $100,000 as of the date of marriage.

However, you must account for the $200,000 increase in the value of the investments between the date of marriage and the date of separation.

In contrast, if you received this inheritance of $100,000 during the marriage and invested the money from the inheritance in stocks and bonds, you get to exclude the total value of this investment, including an increase in the value of the investment from $100,000 to $300,000 by the date of separation.

These rules about inheritances also apply to gifts of money received before or during the marriage.

However, you can see how this get complicated very quickly.

Make sure you spend some time with your family lawyer discussing this important issue in your separation or divorce.

If you have any questions about your separation, divorce or family law case and you would like our help, there’s a few ways to contact our office.  You can leave a message on my Facebook law office page or call me directly at 905-434-8837.  We would be happy to speak to you.

Oh, by the way, did you know you can protect your family law rights and get essential information on settling your family law issues with your former spouse with the daily indispensable family law advice and tips at my FREE Facebook group?

Click here to find out more: Durham Region Separation and Divorce Legal Support Group