How will my inheritance be affected by a separation?
An inheritance received by one party during a marriage or de facto relationship is a contribution made by the party that receives the inheritance, and the inheritance may form part of the property pool available for division if parties separate.
What factors are considered when assessing the parties’ entitlements to an inheritance?
The timing and quantum of the inheritance determine the weight given to the inheritance when assessing the contributions of the parties to their total property pool.
When assessing a party’s entitlements, generally:-
More weight is given to a large inheritance received closer to the end of the marriage or de facto relationship;
The size of the inheritance is also considered in comparison to the asset pool; and
The financial and non-financial contributions made by the parties throughout the marriage or de facto relationship.
What factors are considered when an inheritance is received before or during the marriage or relationship?
If an inheritance is received by one party during the marriage or de-facto relationship, then such inheritance will be considered a financial contribution made by that party.
If an inheritance is received by one party before entering the marriage or de-facto relationship, then such inheritance will be considered a financial contribution made by that party at the start of the de facto relationship or marriage.
When assessing the inheritance as a financial contribution, the following will be considered:
The amount received;
When it was received;
What it was applied towards; and
The size of the asset pool available for division.
Generally, the party that receives an inheritance at the end of the marriage or de facto relationship may receive a greater portion of the parties net assets.
The value of an inheritance received before the marriage or de facto relationship will diminish with time, in particular, if the marriage or de facto relationship is long.
In both scenarios, consideration will be given to other financial and non-financial contributions made by the parties throughout the relationship.
What if one party receives an inheritance after separation?
If an inheritance is received after separation but before the parties finalise their property matter, then the inheritance may be excluded from the main asset pool subject to there being other assets available for division. If the inheritance is excluded from the asset pool, the inheritance may be treated as a financial resource.
The inheritance may also be included in the asset pool but there may be an adjustment on the overall net asset pool in favour of the party that received the inheritance.
It is important to finalise a property settlement as soon as possible after separation to avoid receiving an inheritance that may form part of the asset pool for division.
Can I protect my inheritance before going into a de facto relationship and marriage?
In Order to protect your inheritance from a claim by your spouse or partner, you may wish to consider a Financial Agreement before or during the de facto relationship or marriage.
Overview
When it comes to inheritance and separation each case will be considered on its own merits. This article aims to provide a summary of the key factors when dealing with inheritance and separation. If you would like to discuss your inheritance situation, then please call one of our specialist family lawyers for a free 30-minute consultation on 03 9596 0222.
Author: Sanaz Naimi Roshan, Accredited Specialist in Family Law
