Inheritance And Divorce: Why You Need Professionals
Inheritances can be a significant point of dispute in family law property settlements and asset pools, especially when large sums or family estates are involved. Whether you’ve already received an inheritance or expect to in the future, the Federal Circuit and Family Court of Australia has broad discretion in how it handles such assets.
In situations like these, it’s wise to seek legal advice early, especially if property settlement negotiations are underway. In some cases, a binding financial agreement can help protect inherited assets and reduce future disputes. Michael Lynch Family Lawyers can assist with your inheritance and divorce matters, offering a range of vital family law services you can rely on. Contact us.
UNDERSTANDING INHERITANCE AT DIFFERENT RELATIONSHIP PHASES
Inheritance Received Before Marriage
If one party received an inheritance before the relationship began, it may be considered an initial financial contribution. This doesn’t guarantee the entire amount will be protected. However, the Federal Circuit and Family Court of Australia will usually give weight to that contribution when dividing the marital assets or the joint asset pool for the property settlement process.
Inheritance Received During the Relationship
If an inheritance was received while you were married or in a de facto relationship, the Court may consider:
- Who received the inheritance
- How it was used
- The length of the relationship
It may be shared, in whole or in part, especially if it benefited the marital property or family. The specific circumstances of each case will be crucial, and experienced family lawyers can provide guidance.
Expected or Future Inheritance
Even if you haven’t received anything yet, future inheritance can influence a property settlement. While the law has evolved over time, expectations of inheritance remain relevant, especially if the estate is significant and the likelihood of receiving it is high. Each case depends on the specific circumstances, and the Court will consider these factors carefully during the property settlement.
HOW INHERITANCE AFTER SEPARATION IS TREATED DIFFERENTLY UNDER AUSTRALIAN FAMILY LAW
It’s noted that you don’t have to be divorced for an inheritance to play a part in the negotiations in a relationship split. However, this does depend entirely on your situation. Under Australian family law, inherited property can be included in a settlement if the Court finds it fair and appropriate.
Key factors include:
- When the inheritance was received
- Whether it was shared or kept separate
- Its size relative to other assets
- Whether one person is financially disadvantaged
Sometimes, inheritance is treated as a financial resource rather than a tangible asset. That still matters, especially under Section 75(2), where future financial needs come into play. In these cases, your ex-partner may or may not have a claim, depending on the circumstances.
CASE STUDY: EXPECTED INHERITANCE INFLUENCING PROPERTY SETTLEMENT
Case Overview
In the case of Bevan & Bevan [2013] FamCAFC 116, the Full Court of the Family Court of Australia examined how an anticipated inheritance can affect property division during divorce settlement proceedings. The wife was expected to receive a substantial inheritance from her mother’s estate, which had not yet been distributed at the time of the proceedings. The Court considered this anticipated inheritance as a relevant financial resource, recognising its potential impact on the parties’ future financial positions.
Court’s Decision
Although the inheritance was not part of the current asset pool, the Court adjusted the property settlement in favour of the husband. This decision reflected the Court’s acknowledgment that the wife’s financial prospects were significantly improved by the expected inheritance. It underscores that anticipated inheritances can influence property settlements, especially when there is a marked disparity in the parties’ future financial circumstances.
Importance of Legal Advice
The Bevan & Bevan case highlights the importance of working with experienced family lawyers when dealing with divorce and inheritance issues. At Michael Lynch Family Lawyers, we specialise in family law and provide personalised advice to help you understand how anticipated inheritances may impact property settlements, ensuring your legal rights and financial interests are protected throughout the process.
DIVORCE INHERITANCE: FAMILY LAW CONSIDERATIONS
Inheritance after separation is one of the most emotionally and financially sensitive issues in a divorce. Whether it’s already been received or expected in future, it can complicate your property settlement, especially when it involves contributions from a family member or joint use of funds.
How the Court Considers Your Financial Needs
Under the Family Law Act, the Court must consider each party’s future needs, including that of your ex-spouse, their income, health, caregiving responsibilities, and access to any financial resource, like an inheritance. This can lead to an adjustment of the marital asset pool if one person is financially better off.
When Inheritance May Affect Property Settlement
There’s no clear-cut rule for treating a property settlement with your ex-spouse. If an inheritance was used to renovate the family home, support the family, or buy shared property, it may form part of the settlement. If kept separate, it may still impact the property settlement matter, especially when the asset pool compared to the inheritance is small.
How We Help Protect Your Interests
That’s where Michael Lynch Family Lawyers steps in to assist you in navigating your way through the sometimes complex inheritance laws. We assess your full financial picture, explain your options, and help protect what matters, through negotiation, mediation, or court if needed.
Supporting You Through a Difficult Time
When inheritance is involved, the emotional and financial strain of divorce can intensify. At Michael Lynch Family Lawyers, we understand that every situation is unique and deeply personal. Whether you’re trying to keep your inheritance separate or navigating the complexities of dividing assets with your former partner, we’re here to guide you with compassion and clarity.
The separation and divorce process can feel overwhelming, with several factors influencing the outcome, including the court’s decision, which may impact your future financial security. Our goal is to help you reach an amicable agreement whenever possible, reducing stress and preserving dignity for all involved.
Related family law services for inheritance and divorce settlement
Our expert family law services cover key areas to help you understand your rights and options, from dividing property and financial agreements to mediation and court procedures.
- Property Settlement
Guidance on how inheritance and assets are divided fairly between spouses during divorce or separation. - Financial Agreements
Legal agreements like prenuptial or binding financial agreements that can protect inheritance before or during a relationship. - Spouse Maintenance
Support services related to financial assistance one spouse may be entitled to, considering inherited assets and wealth. - Superannuation
Advice on how superannuation funds are treated during divorce and how inheritance can impact them. - Defacto Relationships
Assistance with inheritance and property matters for couples in de facto relationships undergoing separation. - Divorce
Comprehensive legal support for dissolving your marriage, including dealing with inheritance issues. - Family Mediation
Alternative dispute resolution services to help you and your ex-partner reach agreements on inheritance and related matters amicably.
FAQS ABOUT INHERITANCE AND DIVORCE AUSTRALIA
Is a separated spouse entitled to inheritance?
Whether a separated spouse is entitled to an inheritance depends largely on how that inheritance is treated within the overall property pool. If the inheritance has been kept clearly separate from joint finances and not used to benefit shared assets, it may remain excluded. However, courts will carefully examine the specifics of how the inheritance was handled during the relationship before making a decision.
The property I’m inheriting is in a different state from where we lived. Can my ex wife claim inheritance after divorce Australia-wide?
Yes, family law applies across all Australian states and territories, so it doesn’t matter where the inherited property is located. A former spouse can only claim a share of the inheritance if it forms part of the property pool at the time of divorce. If the inheritance was kept clearly separate and not used for household expenses or joint investments, it is less likely to be included in the division of assets.
Is inheritance split in divorce?
Inheritance is not automatically divided between spouses. The Court considers whether the inheritance has become a shared asset. For example, it would consider if it was used to buy the family home or pay joint debts, or if it remains a protected asset kept separate from marital property. Each case is assessed individually based on these details.
Is inheritance included in divorce?
Inheritance can be included in the overall asset pool if it has been mixed with marital assets or used to acquire joint property. Otherwise, it is often treated as separate property, though the court’s consideration will also weigh factors like the length of the relationship and the financial contributions of one spouse.
How can I safeguard my inheritance during divorce proceedings?
Safeguarding an inheritance involves maintaining clear financial separation and avoiding using inherited funds for joint expenses or assets. Establishing a binding financial agreement early in the relationship or during the divorce can help keep the inheritance outside the entire family’s shared assets, making it less likely to be included in the division.
Why is it important to work with family lawyers in inheritance in divorce matters?
Navigating inheritance issues in divorce can be complex due to several factors the Court considers when dividing assets. Skilled family lawyers on our team can provide invaluable guidance, helping you understand your rights, protect your inheritance, and negotiate fair outcomes in what can otherwise be a stressful and confusing process.
Can inheritance be included in the asset division after divorce?
Yes, inheritance can be included in the asset division if it has been combined with joint funds or used to purchase shared property. For example, if inherited money is deposited into a joint bank account or used to pay for the family home, it may no longer be considered separate. This can affect spousal maintenance arrangements as well, since the Court looks at all financial resources available to both parties when deciding on ongoing support.
What happens if two former spouses disagree over whether an inheritance should be shared?
Inheritance disputes are common, especially when only one part of the couple received it, but both had access to the funds. If the inheritance was placed into joint accounts, used for shared expenses, or improved marital property, it may be harder to argue it should be excluded. The court considers many factors, including the initial contribution each spouse made and how the funds were handled over time. When two former spouses present conflicting claims, the court carefully reviews the evidence to decide what is just and equitable.
