Forward-looking estate planning under Canadian law
So the legacy stays in the family
If parents want to bequeath something to their own children, they also want to be certain that the inheritance will remain in the family and not, as in the case of a divorce, that the spouse could benefit from it. How can the estate be arranged with foresight?
Das Family Law Act
The “Family Law Act“ Ontario is the governing divorce legislation in Canada’s most populous province. In general, the law distinguishes between property that comes from an inheritance and the joint “property of the couple”. But as always, there are exceptions here that you should be aware of so that everything goes as planned.
This should be avoided under Canadian law
Married couples are entitled to an equal division of their joint property, minus any exceptions. Assets typically include home and other real estate, financial assets or savings, vehicles, personal property including art and jewelry. Exceptions can apply to goods brought into the marriage. If the parents’ inheritance has already been used, for example, to repay the mortgage on the joint house owned by both spouses, then it is part of the joint property. In the event of a divorce, the spouse is entitled to it.
Important rules and information:
- Separate inherited assets in a comprehensible manner and do not throw them into a joint marriage pot.
- In the event of a divorce, the courts must be able to fully trace the “trace of the inheritance”. It starts with the parents’ will, which should clearly regulate the estate. Much depends on how the inheritance is used, how it is transferred, what happens during the marriage with it and what the courts and that Family Law Act have to say about it.
The best option to inherit:
Plan your estate settlement conscientiously in advance. Discuss the estate with the heirs. This ensures that everyone involved understands what to do with the estate.
This is where a lawyer who is familiar with Canadian inheritance law and estate administration can provide you with the safest and best support.
Sylvia Jacob, owner of Jacob Associates, is one of the most experienced and renowned experts in German-Canadian law. She is admitted to the bar in Germany, Canada, England & Wales on three occasions. The lawyer acts in Germany and Canada, be it in business law matters between Canada and Germany, as well as in private legal areas, e.g. Canadian real estate law.
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