(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.
