A divorce can be a difficult and deeply emotional time, regardless of the chain of events that led you to this moment. Even if you have an amicable split with your partner, contentious issues that require experienced legal assistance can arise. The division of marital assets is one such issue that can present challenges during the divorce process. Inheritance proceeds are typically excluded from the valuation of assets to determine each party’s net family property. However, there are situations that can put inheritance assets at risk.
The experienced high net-worth divorce lawyers at The Riley Divorce & Family Law Firm understand that divorce can be stressful, and we want to help you navigate this process as seamlessly as possible. Whether dealing with property division concerns or other challenges, a Toronto divorce and inheritance lawyer could leave no stone unturned to secure a positive outcome for your case.
When a couple divorces, they must each provide a full disclosure of assets and liabilities to ensure a fair division of marital property. All assets and debts acquired during the marriage, including real estate, pensions, bank accounts, vehicles, artwork, and other property, must be divided between the parties.
While the actual assets may not be split equally, the value of the marital assets should be. This is what is known as the equalization process. All assets and debts will be added up to assess the value of each spouse’s net family property. Often, to achieve the equal distribution of the value of the marital assets, one party will make an equalization payment to the other.
Generally, inheritance money and other items bequeathed by inheritance are not considered marital property. These items remain separate property and are not subject to division; instead, they remain with their respective owners. If an inheritance is received before the marriage, it should be treated as separate property and not counted for equalization purposes.
When the inheritance is received after the marital union, whether it is treated as separate property may depend on how those inheritance funds and assets were subsequently used. For example, if the inheritance money was used to pay for a family vacation or family vehicle or was put in a joint bank account, determining what is separate from marital property may prove more challenging.
Any commingling inheritance assets with marital assets or the existence of a marriage contract with provisions about the inheritance could change how these assets are handled in a divorce. Moreover, if the spouse used the inheritance to fund a purchase, the increase in value of that asset would be considered marital property. A Toronto lawyer can help navigate the complexities of inheritance laws in divorce cases while working tirelessly to ensure that you retain the maximum value of the assets that are rightfully yours.
If you have questions about safeguarding your inheritance money during a divorce, it is wise to consult with a Toronto lawyer who can provide advice tailored to your situation. For example, keeping inheritance funds in a separate account once you receive them can demonstrate that there is no commingling with other marital assets if you need to seek a divorce in the future.
You should not use inheritance or gifted money for the matrimonial home or other joint purchases, as the traceability of assets can become convoluted. It may be wise to execute a marriage contract, such as a prenuptial or postnuptial agreement, to outline how the inheritance would be handled in the event of divorce.
Keep track of the value of your inheritance when you receive it. While the actual inheritance may be excluded from the net family property calculation, any increase in the value of those assets can still be considered for division purposes. For example, an inherited rental property may be excluded from marital assets, but the rental income on that property could be subject to division.
Courts strive for an equal split of marital assets between both parties in the event of a divorce. Both parties must make complete and open disclosures about the extent of their assets. Determining the value and ownership of each party’s property, mainly when assets such as inheritances are involved, can present hurdles.
Although inheritance money or assets are not usually considered marital property, certain actions during the marriage could cause these assets to be commingled and make them subject to division. A Toronto divorce and inheritance lawyer can evaluate your case and help you understand how to proceed best.
Our firm offers 24-hour availability, and our lawyers are ready to assist you with any needs or disputes that could arise during your divorce. Contact The Riley Divorce & Family Law Firm today about your individual case consultation to discuss your questions related to divorce and inheritance.
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