Does an Inheritance Get Divided in an Alberta Divorce?

If you have received an inheritance, or expect one, and your marriage or relationship is ending, you are probably wondering whether your spouse or partner can claim part of it. The short answer in Alberta is that inheritances get special treatment, but that protection has limits.

This article explains the general rule, what is not protected, and why it matters how the money has been used. It is general information only. Your own facts can change the result.

This article covers the law of Alberta.

The general rule: inheritances are exempt

The Family Property Act (RSA 2000, c F-4.7) applies to married spouses and also to adult interdependent partners. The Court may divide all property owned by the spouses or partners, whether it is owned jointly or by one person alone.

There is an important carve-out. Section 7(2) exempts from distribution the market value of property received by inheritance. In plain words, the value of what you inherited is generally left out of the pool that is shared.

The exempt value is fixed at the later of the marriage date (or the date an interdependent relationship began, where that applies) and the date you acquired the property.

What is not protected

The exemption covers the value of the inheritance, not everything that flows from it. Several things fall outside it.

• Growth in value: the gap between the exempt value and the market value at trial, including property obtained by exchange or from sale proceeds, is not exempt. The Court distributes it in a way that is just and equitable after considering the section 8 matters, so it is not automatically split equally.
• Property bought with income from exempt property during the marriage or relationship is also distributed on the just and equitable basis.
• Gifts you made to your spouse or partner out of what you inherited are likewise not exempt.

Unless a written agreement that meets section 38 says otherwise, property is valued as of the trial date.

Mixing inherited money with family funds or the home

This is where people most often run into trouble. Inherited money might be deposited into a joint account, used for a down payment, or spent on renovations to the family home. The Act lets the Court divide property whether it is held jointly or individually, and the growth in an exempt asset is shared on a just and equitable basis.

How a particular mixing or investment affects your exemption depends on the facts and on how courts have applied the Act. It is not something that can be answered with a single rule, so a lawyer can confirm how it applies to you.

What helps in any case is being able to show where the money came from and where it went. The Court of King's Bench Financial Disclosure Statement includes a sworn list of income, assets and liabilities, and a list of property you claim as exempt under section 7. Clear records make that claim much easier to support.

Fairness factors and agreements

Even for non-exempt property, the starting point of equal sharing for property acquired during the marriage gives way if an equal split would not be just and equitable after the Court considers the section 8 matters. Those include each party's contributions, income, earning capacity, liabilities and property, and the length of the relationship.

A written agreement can change the picture. A subsisting written agreement dealing with ownership and division of property can displace the Act's rules if it meets section 38, which requires each party to acknowledge in writing, apart from the other, that they understand it and sign freely, before a lawyer who does not act for the other party.

If the inheritance has not yet been received, or arrives around the time of separation, timing can matter. That is worth raising with a lawyer rather than assuming.

What to do next

• Gather the will, estate documents or letters showing what you received and when.
• Keep bank statements showing where the inherited funds were deposited and how they were spent.
• List any home purchase, renovation or investment that used inherited money.
• Note the date of your marriage or the start of your relationship, and the date you separated.
• Check whether you and your spouse or partner ever signed a property agreement.
• Speak with a family lawyer before moving funds or making major decisions.

Acting early also protects you against delay. A spouse generally has 2 years from separation to apply, and adult interdependent partners have 2 years from when they knew or should have known the relationship had ended.

Frequently asked questions