Protecting Inheritance in the Event of Divorce or Separation
HomeDivorceProtecting Inheritance in the Event of Divorce or Separation
If you received an inheritance from a loved one, it was intended for you, not your spouse.If you are not careful with your inheritance, you may be forced to share it with your spouse if you separate or have an Alberta divorce.
Getting an Inheritance while Married
Because every scenario is different, you should obtain advice tailored to your specific requirements. However, some general recommendations are given below.
Inheritance Is Normally Not Included
When married spouses are getting a divorce in Alberta, the partner whose property has increased the most usually pays. Each person’s ‘net family property,’ or the growth in value of their property throughout the marriage, is calculated.If you received an inheritance before marrying, you would be given credit for the remainder of the bequest on the date of your marriage. Depending on the language in the deceased person’s Will, the growth of the inheritance may be excluded from your net family property (the person who left you the inheritance).You could deduct the value of your inheritance from your net family property on the date of separation if you received it during the marriage. On the day of separation, you do not split the value of any residual inheritance.
Inheritance Given before Marriage
If you got it before your wedding date, make sure you document and maintain documentation that you:
Were given an inheritance – keep the Will and any letters from the Estate Trustee verifying your inheritance.
Set up a separate account for the inheritance in your name;
Retain proof that the inheritance was deposited into the account;
Document the remainder of the inheritance at the time of marriage. Keep a copy of the bank statement indicating the balance if the inheritance was in a bank account at marriage. If the money was invested in other assets, save proof that you purchased assets with the bequest and the value of those assets on the day of marriage. Act promptly because this knowledge may become tougher in the future.
Keep the inheritance and interest profits in a separate account if the Will states you can exclude interest income from the inheritance (which most Wills made by a lawyer do).
Don’t put your inheritance money into a home you’ll share with your husband (this includes not paying down the mortgage). If you do, and you still live with that spouse in that home on the date of separation, your deduction is lost.
Don’t use the bequest to settle any mutual debts.
Wait till after you’ve married to exhaust your inheritance.
Keep Any Inheritance You Received Throughout Your Marriage Safe
To avoid being barred from receiving an inheritance during the marriage, you should:
continue to document and retain the proof of your inheritance;
set up a separate account for the inheritance in your name;
retain proof that the inheritance was deposited into the account;
do not utilize the inheritance to purchase assets that you and your spouse jointly possess;
do not deplete the inheritance as much as possible.
do not use the bequest to settle joint debts.
do not use the inheritance to purchase a property for you and your spouse, improve your current home, or pay off your mortgage.
If you’re using inheritance to buy assets, avoid depreciating assets. Only the value of the account or assets traceable to the inheritance that is still there on the date of separation agreement in Alberta Canada is excluded.
Keep records confirming that assets were purchased with monies from the inheritance’s exclusive account if you utilize the inheritance to buy assets.
The suggestions above may limit how you can use and preserve your inheritance. Many people, in particular, aspire to buy a house with their spouse or make changes to their current property. Suppose you wish to use your inheritance instead of storing it in a sole name account. In that case, you should carefully consider enrolling in a marriage contract, which can help you secure your inheritance while allowing you some flexibility.Alberta Divorce Finances provides the dependable services of an Alberta divorce financial planner. Alberta Divorce Finances can assist you if you need assistance navigating your divorce due to your business or other difficult issues. Contact us so that we can schedule a consultation.