In general, a spouse is not automatically entitled to inheritance money in Australia. Inheritances are treated as the separate property of the person who received them, and are not considered joint or marital property. However, there are some circumstances where an inheritance may be subject to division in the event of a divorce.
If the inheritance is commingled with joint assets, such as being deposited into a joint bank account, then it may become part of the marital property and subject to division. Similarly, if the inheritance is used to acquire joint assets, such as a property, then it may also become part of the marital property.
It’s also important to note that in some cases, a spouse may have a claim to some of the inheritance money if they can demonstrate that they contributed to the acquisition or improvement of the inheritance. For example, if a spouse provided significant support to the person who received the inheritance, such as through financial or domestic assistance, then they may be able to make a claim for a portion of the inheritance.
In Australia, inheritance law is governed by each state and territory’s laws. Generally, when someone passes away without leaving a valid will, their assets will be distributed according to the intestacy laws of the state or territory in which they lived. If the deceased had a will, then the assets will be distributed according to the terms of the will.
Inheritances are not considered marital property in Australia. However, if the inheritance is used to acquire a joint asset, such as a property, then the inheritance may become part of the marital property. If a spouse receives an inheritance and then deposits it into a joint bank account or uses it to pay off a joint debt, then the inheritance may be considered marital property. In these cases, the inheritance may be subject to division in the event of a divorce.
In addition, when it comes to property settlement matters, the Family Court will assess whether the inheritance should be considered part of the asset pool or kept separate from it.
Several factors can influence the way in which the court will treat the inheritance in the property settlement, including:
While all of these factors hold significance, the timing of the inheritance may be the most influential.
During a divorce settlement, the Australian family court will consider the intentions of the benefactor when examining the inheritance.
For instance, if the benefactor intended for the inheritance to benefit the entire family, it is likely to be considered as part of the joint asset pool. Conversely, if the inheritance was intended solely for the named beneficiary and kept separate from other assets, it would be regarded as independent from the joint pool of assets. Ultimately, the court will assess the evidence to support the benefactor’s intentions before making a decision on the distribution of the inheritance.
The court will also evaluate the relationship between the spouses and the benefactor. For example, if both parties lived with or took care of the benefactor, the inheritance is likely to be considered part of the joint asset pool.
There are several ways to protect your inheritance from your spouse in Australia. One way is to keep the inheritance separate from any joint assets. For example, you could deposit the inheritance into a separate bank account that only you have access to. You could also use the inheritance to purchase assets that are solely in your name, such as property or investments.
Another way to protect your inheritance is to enter into a Binding Financial Agreement (BFA) with your spouse. A BFA is a legally binding agreement that outlines how your assets will be divided in the event of a divorce. This agreement can include provisions for how any inheritance will be treated.
However, if you commingle your inheritance with joint assets, it may become part of the marital property and subject to division in the event of a divorce. Therefore, it’s crucial to keep your inheritance separate and take steps to protect it if you want to ensure that it remains your separate property.
Obtaining legal advice from family lawyers in Sydney who specialises in property settlements can assist you in comprehending your legal entitlements and obligations concerning inheritance matters. Whether you have obtained an inheritance during your relationship and wish to safeguard it, or you have received an inheritance after separating, it is advisable to seek legal guidance.
Although it is impossible to predict how a property settlement case will be resolved in court, an experienced family lawyer specialising in property settlements can offer insights into the probable outcomes that may be applicable to your specific situation.