Today’s blog was written by Douglas Buchmayer, partner with the Ottawa office of Gowling WLG (Canada) LLP, together with the assistance of our summer law student Stephanie Katajamaki.

It would be rare to find an Ontario Will drafted by a lawyer that does not contain a Family Law Act, Net Family Property clause. They are ubiquitous. However, few clients fully appreciate the limited purpose or utility (and necessity) behind these clauses. They are not a catchall clause for sheltering and protecting the inheritance of a divorcing beneficiary, although they usually have the appearance of trying to achieve this objective.

If a beneficiary under a Will is married at the time of the testator’s death, paragraph 4(2)1 of the Family Law Act provides that “Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage” does not form part of the beneficiary’s net family property and therefore does not have to be shared with a divorcing spouse (assuming that the gift is kept separate and apart and not comingled with other family assets).  So such protection is already a matter of statutory law and has nothing to do with what is stated (or omitted) in a testator’s Will.

However, “Income from property referred to in paragraph 1” is not automatically protected in a similar fashion, unless, as set out within paragraph 4(2)2 of the Act, “… the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property”. This, and this alone is the purpose of the Net Family Property Exclusion clause. Such protection is not a matter of statutory law and therefore has to be specifically stated in the testator’s Will.

While not defined in the Act, “income” has been considered in case law to be capital appreciation or income derived from the inheritance asset (Lau v Tao 2025 ONSC 157 at para 188), accretions from invested inheritance funds (Maher v Maher 1995 CarswellOnt 1994 at para 6), growth in property value of an inherited property (Farmer v Farmer 2021 CarswellOnt 12636 at para 93), and property purchased with an inheritance (Bennett v Bennett 1997 CarswellOnt 4682 at paras 86–87).

This protection only applies however to legally married beneficiaries who are married at the time of the testator’s death. It has no relevance at all under present Ontario law to common law spouses as they are not required to share “net family property” values upon termination of the relationship.