Beyond the Will: A Steward's Guide to Protecting Your Inheritance in BC
- Rolf Issler
- 14 minutes ago
- 4 min read
The moment you receive an inheritance is rarely one of simple joy. It’s a complex, quiet moment, often layered with grief, gratitude, and a new, sudden weight of responsibility.
For many, this is the first encounter with "Sudden Wealth Syndrome"—a disorienting mix of anxiety and pressure. You are not just receiving money; you are receiving a legacy, an artifact of a lifetime of work, and the responsibility to steward it wisely.
And in that disquieting moment, it is terrifyingly easy to make one small, irreversible mistake.
Perhaps the most common—and most devastating—mistake I see is also the most innocent-sounding: commingling.
It's the simple act of depositing an inheritance cheque into the same joint bank account you share with your spouse. It's using that money to pay down the mortgage on the family home or to jointly invest in a new property. These seem like logical, even collaborative, financial moves.
But in British Columbia, these innocent acts can permanently and irrevocably dissolve the protected status of your inheritance, transforming it from a "separate" asset into a "family" asset, divisible upon a marital breakdown.
The hard truth is this: The moment you commingle, you may lose the ability to protect that legacy forever.
Why Is Commingling So Dangerous in BC?
The law in British Columbia, specifically the Family Law Act, is built on a foundation of fairness and partnership. It defines "family property" as all assets acquired by either spouse during their relationship, which is to be divided equally if they separate.
However, the Act also makes a crucial exception for "excluded property." This includes assets that each spouse brought into the relationship, gifts, and—most importantly—inheritances.
An inheritance is intended for you, not for "the family." It is legally separate.
But here’s the critical catch: This protection is not automatic. It must be actively maintained.
The Act essentially says that if you treat your separate, excluded property like family property—by mixing it, or "commingling" it, with joint assets—the law will see it as family property.
That single bank deposit, that mortgage payment, that joint investment—these acts demonstrate an intention to share the asset, and in doing so, you can legally erase its "excluded" status.
The Steward's First Act: Create Separation
If you have received an inheritance, or expect to, your first act of stewardship is not to invest it. It is to protect it.
This is not an act of mistrust against your spouse. It is an act of clarity and trust for the person who left you the legacy. You are honouring their specific intention.
Here is the immediate, non-negotiable plan:
Open a New, Separate Account: Before you deposit a single dollar, open a new bank account in your name only. This will be the "safe harbour" for the inheritance.
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Document Everything: Keep a clear paper trail. Retain a copy of the will, the letter from the executor, and the bank statements showing the initial deposit into your separate account. This is called "tracing," and it is your primary defense.
Do Not Mix: This account cannot be used for household bills, joint vacations, or family expenses. It must remain pristine.
Only after you have taken these steps to secure the principal of the inheritance can you begin to architect a plan for how to steward it.
"But We Want to Share It."
This is a common and noble sentiment. But "sharing" and "commingling" are not the same thing.
Commingling is an irreversible legal and financial action, often done by mistake.
Sharing is a conscious, intentional decision you make from a position of control.
If your intention is to share the inheritance with your spouse, that is a beautiful goal. We can architect a plan to do that safely. We can draft a spousal agreement that clearly outlines what is being shared, how it will be used, and what remains separate.
This approach—based on clarity and intention—protects everyone. It prevents the law from making a decision for you, and it ensures your stewardship is an act of proactive leadership, not reactive damage control.
Frequently Asked Questions
What if I already deposited the cheque into a joint account?
The situation is serious, but not always irreversible. We must act immediately to "trace" the funds. This involves complex financial forensics to prove exactly which portion of that account's funds originated from the inheritance. It is a difficult and expensive process to unwind, which is why preventing it is so critical.
Does this apply to the growth on my inheritance, too?
This is a key distinction in BC law. While the original inheritance (the "principal") is excluded, the growth on that inheritance—such as interest, dividends, or capital gains earned during the relationship—is typically considered family property and is divisible. This is why active, strategic planning is essential.
How can I use my inheritance to benefit my family without commingling?
This is the core of true stewardship. From your separate, protected account, you can make intentional gifts to your family, pay for specific expenses directly, or loan money to your spouse via a formal, documented loan agreement. These are acts of control and intention, not accidental commingling.
The weight of an inheritance is real. It's the weight of a legacy, the weight of Sudden Wealth Syndrome, and the weight of responsibility. But you do not have to carry it alone.
Your role is not to be an expert in the Family Law Act. Your role is to be a faithful steward. My role as your Personal CFO is to be your guide, architecting the clear, protective plan that allows you to fulfill that purpose with confidence.
If you are ready to move from anxiety to clarity and ensure your legacy is protected with intention, the first step is a simple conversation.
By Rolf Issler, BMgt, CLU®
Personal CFO for Founders &Families in Kelowna
ProsperWise Advisors
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