- Under the Family Law Act, most gifts and inheritances a spouse receives from a third party during the marriage are excluded from equalization of net family property — meaning they…
- The statutory exclusion is not indestructible.
You received an inheritance from a parent, or a substantial wedding gift from family, and you want it to stay yours if the marriage doesn't work out. Good news: Ontario's Family Law Act already builds in a general exclusion for most gifts and inheritances received from someone other than your spouse during the marriage. Less good news: that statutory protection is easier to lose than most people expect, which is exactly why an exclusion clause in a marriage contract is worth getting right rather than assuming the default law will do all the work.
This guide explains what the built-in exclusion covers, where it commonly breaks down in practice, and how a marriage contract clause can be worded to hold up better than a bare, one-line mention of "gifts and inheritances are excluded."
The Law Already Excludes Most Gifts and Inheritances — So Why Add a Clause?
Under the Family Law Act, most gifts and inheritances a spouse receives from a third party during the marriage are excluded from equalization of net family property — meaning they generally aren't counted as part of the growth in net worth the couple otherwise shares equally. That's a helpful starting point, but it's a default rule applied after the fact, at separation, using whatever records and tracing exist at that point. A marriage contract clause lets a couple:
- Confirm the exclusion in writing, at the outset, rather than relying on proving it later
- Address growth or income earned on the gifted or inherited property, which isn't automatically covered the same way as the original amount
- Set out how the couple intends to keep gifted or inherited funds separate going forward
Where the Default Exclusion Breaks Down
The statutory exclusion is not indestructible. It commonly runs into trouble when:
- Gifted or inherited money is deposited into a joint account and mixed with other funds, making it hard to trace later
- Inherited or gifted funds are used to buy or pay down a matrimonial home — the matrimonial home receives special treatment under the Family Law Act, and property used toward it can lose the exclusion that would otherwise have applied
- Records simply aren't kept — no paper trail showing the money came from a gift or inheritance and where it went afterward
- The gift or inheritance is used to fund a joint purchase, joint investment, or joint renovation without any documentation distinguishing whose money it was
Vague Wording vs. Specific Wording
| Vague clause | More specific, durable clause |
|---|---|
| "Any gifts or inheritances are excluded from equalization." | Identifies the source, such as a named family member, confirms it will be kept in a separate, individually held account, and states the parties' intent regarding any growth or income earned on it |
| Silent on what happens if the funds are used toward the matrimonial home | Addresses directly what happens if inherited or gifted funds are ever put toward a home the couple lives in |
| Assumes "the law already covers this" | Restates the exclusion in the couple's own words and adds recordkeeping expectations |
| No mention of jointly titled property | Specifies that jointly titling an asset purchased partly with excluded funds doesn't automatically waive the exclusion |
What a Well-Drafted Exclusion Clause Should Include
- [ ] Names the type of property being addressed — an existing inheritance, an anticipated future one, a specific gift
- [ ] States an intention to keep the funds traceable, such as holding them in a separate account
- [ ] Addresses growth or income earned on the excluded property, not just the original amount
- [ ] Specifically addresses what happens if the funds are ever used toward the matrimonial home
- [ ] Is revisited if a significant inheritance is received partway through the marriage, rather than relying only on wording drafted years earlier
Frequently asked questions
Do I need a marriage contract for an inheritance to be excluded from equalization?
Not necessarily — the Family Law Act provides a general exclusion for most gifts and inheritances received from a third party during the marriage, even without a contract. A contract clause is about reinforcing that protection and addressing situations, like commingling or the matrimonial home, where the default exclusion is vulnerable.
What happens if I deposit inheritance money into our joint account?
Doing so can make it much harder to prove which funds came from the inheritance, which can put the exclusion at risk regardless of what a contract says, if it can't be traced. This is one of the most common ways people accidentally weaken their own protection.
Does the exclusion cover money my inheritance earns in investments?
Growth or income earned on excluded property isn't automatically treated the same way as the original excluded amount under the general rule — this is exactly the kind of gap a well-drafted clause is meant to address directly.
Can this type of clause go in a cohabitation agreement instead of a marriage contract?
Yes — a cohabitation agreement can address how gifts and inheritances are treated for unmarried partners, though the starting legal framework is different since common-law partners don't have an automatic equalization right in the first place.
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