When determining a party’s net family property, assets that the person acquired by inheritance and/or gift are eligible for exclusion. Furthermore, the Family Law Act allows the exclusion of property that can be traced to this asset. That is, a person can exclude an investment that was purchased with funds from an inheritance. Until the instant case, any such excluded asset that was used to purchase any property that is jointly owned by the parties lost its eligibility for exclusion. In Cartier, the Ontario Superior Court of Justice broke this trend and determined that, in certain circumstances, the spouse who received the inheritance or gift may still be entitled to exclude their half of the jointly owned property.

In Cartier, the parties were married for 23 years. During the marriage, the husband inherited some farmland from his mother. In 2004, the parties sold this land and put a portion of the proceeds into a joint investment account, while they became joint creditors on debts for the remaining profits. As mentioned above, the husband’s inheritance would ordinarily have qualified him for an exclusion from his net family property under section 4(2) of the Family Law Act. Similarly, any asset that was purchased with the proceeds of inherited property would be excluded under section 4(5) of the Act. However, the fact that the husband placed the proceeds of the sale of the inherited farm into jointly held assets should have defeated his claim for such an exclusion. The Court preferred the evidence of the husband, who stated that he intended for each party to have 50% of the value of these assets. This intention makes this case different from its predecessors in that previous cases dealt with assets that could be traced to excluded property which were intended for the “common purposes of the family”. The husband’s clear intention that the value of the newly acquired assets would accrue in equal shares to each party is definitive proof that they were not for the common purposes of the family. Additionally, previous litigants have attempted to rebut the presumption that assets held in the parties’ joint names are jointly owned, which is set out in section 14 of the Act. Instead, Mr. Cartier accepted that the assets are jointly owned and, therefore, only claimed an exclusion over his half of the assets. For these reasons, the Court saw fit to allow Mr. Cartier to exclude the value of his half of these assets for the purposes of calculating his net family property.