If you want to keep wealth in the family, be careful how you bequeath it
In Canada, care must be taken in how you pass on an inheritance to your children. Some provinces, like Ontario’s Family Law Act, clearly protects inherited wealth by ensuring that it remains the property of the inheritor, and not be split equally in case of a divorce, after it is bequeathed. However, how the inherited or gifted funds are used can nullify this exclusion. For instance, if the inheritance is used in the matrimonial home, then the courts will decide whether or not the money qualifies for exclusion. This example illustrates why it is important to be aware of how you designate any wealth you will be passing to your children.
“Beneficiaries of an inter-generational transfer of wealth should take notice of the need to properly plan if the intent is to ensure the funds are not shared in the unfortunate event of a divorce.”