Protecting Your Inheritance: What Beneficiaries Should Know
Disclaimer: This article is for informational purposes only and is not legal advice. Every situation is different. You should speak with a lawyer before making decisions about your estate or property.
Can My Spouse Claim Part of My Inheritance if We Separate?
The short answer is: maybe.
If someone leaves you an inheritance, it may be protected from division if your marriage ends. However, that protection can be lost depending on how the inheritance is used. Taking a few simple steps early can make a significant difference.
Is My Spouse Entitled to a Portion of My Inheritance?
Under New Brunswick's Marital Property Act, married spouses generally divide marital property equally when they separate. However, gifts and inheritances received by one spouse are not considered marital property from the outset.
This means the starting position is that an inheritance will not be divided between spouses if the marriage ends. However, whether an inheritance remains protected depends heavily on the circumstances.
The key consideration is whether the inherited property or money has become a family asset. If it has, it may become part of the property available for division upon separation.
What Makes an Inheritance a Family Asset?
Property may become a family asset when it is ordinarily used or enjoyed by the family for purposes such as shelter, transportation, or household needs.
Common examples include:
Using inherited funds to purchase or renovate the family home
Depositing inherited money into a joint account used for household expenses
Investing inherited funds alongside your spouse's money
Even if an inheritance becomes a family asset, a court may still decide to exclude it from division. However, that outcome is not guaranteed. The classification of property is highly fact-specific and ultimately determined by the court based on the particular circumstances of the case.
What About Common-Law Partners?
The Marital Property Act applies only to married spouses. Common-law partners do not have the same statutory right to equal division of property upon separation.
As a result, an inheritance received by one common-law partner will generally remain that person's property when the relationship ends.
That said, a common-law partner may be able to advance a claim if they contributed to the maintenance, preservation, or growth of the inherited property. These claims depend heavily on the specific facts and nature of the contributions made, making outcomes difficult to predict.
It is also important to recognize that property disputes can be expensive and time-consuming. A written domestic contract can be an effective way to address these issues before they become a dispute.
How Can I Protect My Inheritance?
A few practical steps can help preserve the protection of an inheritance:
Keep It Separate
Hold inherited funds in an account that is solely in your name. Avoid mixing inherited money with joint funds or using it for shared expenses whenever possible.
Keep Good Records
Maintain documents that show where the inheritance came from and how it has been used. A clear paper trail can be invaluable if the issue is ever considered by a court.
Consider a Domestic Contract
Married and common-law couples can enter into a written agreement outlining how property, including inheritances, will be treated if the relationship ends.
To be valid, the agreement must be signed by both parties and properly witnessed. While domestic contracts are not immune from challenge, a well-drafted agreement supported by independent legal advice is much more likely to withstand scrutiny.
Seek Legal Advice Early
The sooner you obtain legal advice, the more options you may have to protect your interests and avoid unexpected outcomes.
Have Questions?
Contact one of our offices to speak with a member of our team.