Every marriage looks different. Each couple has to decide how to structure their lives and their finances in a way that fits the partnership that they want to build. Sometimes that means sharing everything, and sometimes it means managing your own finances and contributing to shared expenses. When it comes to inheritances – especially one received during a marriage – many people want to know: Can I keep it separate?
The short answer is yes – but only if you take the right steps. In this article, we’ll explain how Canadian family law treats inherited property, when an inheritance can become part of the marital estate, and how to protect it before and during marriage.
How Can You Keep Inheritance Separate in Marriage in Canada?
What Is Separate Property?
In Canadian family law, separate property refers to assets that are excluded from the equal division of family property during a divorce or separation. In most provinces, this includes:
- Inheritances received during the marriage
- Gifts received from third parties
- Property owned before the marriage (though the increase in value of that property may be shared)
That said, just receiving an inheritance doesn’t automatically guarantee you’ll keep it if the relationship ends. How you handle that inheritance makes a big difference in whether it stays separate from marital assets.
Strategies to Protect Your Inheritance During Marriage
To keep your inheritance legally separate, you need to take proactive steps, including:
- Keep it in a separate account: Don’t deposit it into a joint account.
- Avoid using it for shared purchases: If you use inheritance money to buy a family home or shared property, it can lose its “excluded” status.
- Keep clear records: Maintain a paper trail showing when you received the inheritance and how it was used.
- Create a marriage contract (prenup or postnup): The most reliable way to protect inherited property is with a legal agreement that clearly defines what belongs to whom.
Jointly helps couples do just that: create agreements that protect what matters, without expensive legal fees or confusing legal language.
Understanding Inheritance and Marital Property Laws
What Is Considered Marital Property in Canada?
In most provinces (including Ontario, British Columbia, and Alberta), marital property generally includes:
- Property acquired during the marriage
- The matrimonial/family home (regardless of who paid for it)
- Income earned and assets accumulated during the marriage
- Joint accounts and shared investments
In a divorce, this property is typically divided equally. However, excluded property, like inheritance or gifts, is not – as long as it remains separate.
Are Gifts Marital Property or Separate Property?
Gifts from third parties (like your parents or a family friend) are treated similarly to inheritances. If they were intended only for you – and not for both partners -they may be excluded from division. But again, the way you use that gift matters. A cash gift spent on a joint renovation of the family home, for example, may no longer be considered separate.
Common Scenarios Where Inheritance Becomes Marital Property
Even though an inheritance is technically “excluded property,” it can quickly become shared if you’re not careful. Let’s look at a few common situations where people lose their claim to inherited funds.
Using Inheritance to Buy Property During Marriage
Buying a house with inherited money might seem like a smart move – but if you put your spouse’s name on the title or use it to purchase a matrimonial home, the inheritance may lose its protected status.
In Ontario, for example, the matrimonial home is always included in property division, even if it was purchased with separate funds. That means that without a prenup, you could lose half the value – even if the home was bought entirely with your inheritance.
Commingling Inheritance Funds with Joint Finances
Once you combine (or “commingle”) your inheritance with joint bank accounts, investments, or business ventures, it can become difficult to prove which part of your property is truly separate. Courts often see this as an intention to share the money and will divide it accordingly.
To avoid this, always:
- Keep your inheritance in a separate account
- Don’t use it for shared expenses
- Avoid titling property (like vehicles or investments) in both names if they are purchased using inherited funds
Protecting Assets Through Legal Tools
The Role of Prenuptial Agreements in Protecting Separate Property
The most effective way to protect your inheritance if you’re married is through a prenuptial agreement (before marriage) or postnuptial agreement (after marriage).
These agreements can:
- Clearly define what is separate property
- Outline how increases in value will be treated
- Exclude specific assets from division during a divorce
- Specify what happens to property acquired in the future
Even if you’ve already received the inheritance, it’s not too late. A postnup is just as effective – especially when created with a platform like Jointly, which makes it easy and affordable for Canadian couples.
How Joint Property Laws Affect Inheritance in Divorce
Many provinces have laws that override the inheritance exclusion depending on how the funds are used. For example:
- Ontario: Be extra cautious if using your inheritance to purchase the family home. Even if one spouse purchases the home, both are entitled to equal sharing of its value.
- British Columbia: Inherited property is excluded – but gains in value during the relationship may be shared.
- Alberta: Inherited property is excluded, but the court can divide it if it’s deemed “unjust” not to.
The rules are complex – but a good agreement can help you stay in control of what happens.
Navigating Divorce and Property Division
Separate Property in Divorce
If your marriage ends and there’s no legal agreement in place, courts will look at:
- Whether your inheritance remained separate or was used for shared purposes
- Whether it was commingled with joint assets
- How it contributed to the family’s wealth and lifestyle
If you’ve kept the inheritance clearly separate – and have documentation to prove it – you have a much stronger chance of keeping it after divorce.
Divorce and Property Owned Before Marriage
Property you owned before marriage is usually considered excluded – but again, it depends on how you treated it during the marriage.
For example:
- If you bought a condo before marriage and kept it in your name, it may be separate.
- If you turned it into the family home and added your spouse to the title, it may now be shared.
Even if your pre-marriage property stays yours, any increase in value during the marriage is often split—unless your agreement says otherwise.
Frequently Asked Questions About Inheritance and Marriage
Can My Spouse Claim My Inheritance in a Divorce?
It depends. If you kept the inheritance separate – different account, no joint purchases – your spouse may not have a claim. But if the funds were used to buy the family home, pay off joint debt, or mixed with shared money, they may be treated as joint assets.
A legal agreement is the only sure way to protect your inheritance from being divided.
What Happens to Property Acquired During Marriage in Divorce?
Unless it’s excluded (like a gift or inheritance), property acquired during marriage is typically shared 50/50. This includes:
- Real estate
- Pensions and RRSPs
- Businesses
- Savings and investments
- Debt
If you want to keep something separate – especially something important like a family cottage or inheritance – you need to take clear steps in advance.
Why Choose Jointly for Your Asset and Inheritance Protection Needs
At Jointly, we believe that protecting your financial future shouldn’t be intimidating or expensive.
We help Canadian couples create personalized, legally sound prenuptial and postnuptial agreements that clearly define separate and joint property – including inheritance.
With Jointly, you get:
- A free Agreement Starter Kit that explains the law in your province and helps you share details of your property
- Affordable, flat-rate pricing
- Easy-to-understand language (no legalese!)
- A legally valid agreement built with lawyer-reviewed clauses tailored to Canadian law
Whether you’ve already received an inheritance or want to protect future gifts, we make it simple to create an agreement that works for both of you.
Inheritance is personal – but protecting it doesn’t have to be complicated.
Start your prenup or postnup today.
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