Inheritance

[Shawkid]

I think I know the answer but just wanted to check (not looking to get out of CS, just curious)

My eldest told us that his Grandpa isn't well, spending time a lot of time in hospitals recently. Both his maternal grandparents are independently wealthy, although my ex-wife plays the pauper with hand-outs from her parents under the table.

Should her father pass, she and her brother would inherit at least $200,000 each, with the grandchildren (5) receiving $50,000 each. I know that each grandchild was in the will for $50,000 at the time of our divorce. I don't suspect that's changed. (I should add that he has other beneficiaries. I suspect she and her brother would likely get more like $500,000 each in the end, but I'm looking at the lowest possible right now)

I can't see a way for her to hide this money like she has with the financial help they've always given her.

Her mother has about the same in assets but is still in good health from what I understand.

What, if anything, does a sudden increase in worth like this do to a support situation. I pay $500+ in OS and 55% of s.7. Not looking to get around it, but curious if there are is any impact on sudden wealth from her side.

My family have no assets, so no chance of my worth going up. Unless LottoMax comes through for me

 

[paris]

Simple. Inheritance does not count as income. Neither do handouts from the parents or anyone else. There is no reason for her to hide it.

 

[Berner_Faith]

Don't quote me but the only time this would affect support would be if she invested it. I *think* any income made off the investments would count as income for her, but the inheritance itself wouldn't

 

[stripes]

The inheritance itself doesn't affect CS which is based solely on income. I'm guessing Berner_Faith is right about interest on investments, because investment income goes on the tax form before line 150. So if your ex wants to maximize CS, she'll buy some big piece of property with the inheritance or blow it all on wild vacations and fur coats.

 

[Tayken]

Don't quote me but the only time this would affect support would be if she invested it. I *think* any income made off the investments would count as income for her, but the inheritance itself wouldn't

Generally no. The money made from inheritance can be protected. Inheritance is money that the party had no control over and received under an estate. If the person has a good financial advisor they will simply setup the money to be protected from the other party.

What the OP should note is that money left to a minor child if not put "in trust" would be taken by the OCL (something else they do) and managed until they reach the age of majority.

More than likely the will was changed after your divorce to protect the parties receiving the money. Any family with any level of "wealth" would do this.

Good Luck!
Tayken

 

[stripes]

(Thinking about this some more - I believe there are ways to set up trusts for inheritance in which any income earned is added to the capital. The person in whose name the trust is held is able to draw money from the capital, but technically not from the income, so it does not get reported as investment income for tax purposes. I heard about this from relatives who were trying to set up a trust for a developmentally disabled adult child so that the child could benefit from the money but not lose eligibility for their disability pension because their declared income was too high. I believe this was called a Hanson trust. I could be completely wrong about this, but maybe it's something to think about).

 

[nfc4ever]

I believe that you're referring to Hensen trusts, and those are intended for disabled recipients.

A court might look at withdrawing capital instead of earnings as just a shell game, and treat it as income for support purposes. I.e. Impute it as income.

 

[Shawkid]

Thanks! Like I say, not trying to get out of CS, just curious about the effects.

I presume that I have no say in how their $50,000 is handled? I would love to see it go straight into RESPs because I'm afraid University tuition is going to be unreachable by the time they're ready. Some American articles (because I couldn't find any good Canadian ones) said it could be over $100,000 per year.

I want them to get an education and not throw it away on things they don't need.

 

[paris]

It should be specified in the will that it's held in trust until they reach a certain age by someone named in the will. That person is expected to handle it in the best way. How old are the kids? There should be more than enough to cover their 1/3 share of post-secondary school costs.

 

[mcdreamy]

I presume that I have no say in how their $50,000 is handled? I would love to see it go straight into RESPs because I'm afraid University tuition

Grandpa's will could say $50,000 to buy the boy his first red corvette, and the girl gets a pony. You have no say in how their money is handled, but on the upside, your kids could potentially be receiving a fantastic benefit from that side of their family.

If Grandpa did perchance set the funds aside specifically for the education and advancement of his grandkids, unfortunately for you I think you still have to plan on paying your 1/3 proportionate share of secondary education. There are many many cases on Canlii that deal with Grandpa's trust funds but I think, typically, judges don't deem these bequests as relieving the divorced parents from their share unless we are in the millions - you'll need to spend some time over on Canlii.

Btw, do you understand that RESP contributions made by one parent postseparation, are to that parent's benefit when calculating university? The grant portion may be equalized but the contribution itself remains that of the parent who contributed.