29 November 2016

Inheritances used to purchase property placed in joint tenancy - November 2016 update


(Not a very catchy title to this blog article I realize but the issue of excluded property and inheritances keeps coming up so I wanted to add my notes on this new case, and be perfectly clear about what it says, or what I think it says)  by Karen F. Redmond
On November 17, 2016 the BCSC decision in Lahdekorpi v. Lahdekorpi, 2016 BCSC 2143 was released, which gives us yet another little nugget on division of excluded property, in particular when inheritance funds are used to purchase property placed in joint tenancy with a spouse. 

At trial, the husband had conceded that the wife’s $30,000 inheritance was excluded property.  Mid-way through the trial, and after the Court of Appeal decision in  V.J.F. v. S.K.W., 2016 BCCA 186 was released, the husband changed his position and argued that the wife was not entitled to keep her inheritance because the money had been used to purchase the family home, therefore he argued that she lost her claim to exclusion by putting the property in joint tenancy, which gave him right of survivorship.  Mr. Justice Harris in Lahdekorpi distinguished the V.J.F. case and found that the wife’s $30,000 inheritance was still considered excluded property, saying, at paragraph 94: 

“In the instant case, the Shirley Road property was purchased, in part, with the respondent’s $30,000 inheritance and the property was registered jointly in both their names. In my view, the joint tenancy effectively preserved her contribution to the property, which was purchased for approximately $130,000. In these circumstances, I am not persuaded that the respondent could reasonably be said to have intended to gift her inheritance to the claimant. I note that, although the parties purchased subsequent properties using, in part, income derived from the Shirley Road property, the properties were either held jointly or in the sole name of the respondent. In my view, the $30,000 used in the purchase of the Shirley Road property can be traced back to the inheritance, such that it does not lose its character as an inheritance.”

So, it appears for now, that as long as you can trace your excluded property, it is safe if used to purchase property placed in joint tenancy with your spouse.  I note the reference to the ‘intentions’ of the wife at the time she received her inheritance, which still appear to be relevant in consideration of claims to excluded property. 

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