When de facto or married partners separate, inheritance is not considered a protected asset or property.

An inheritance is a gift, devise, or bequest of property that a person can receive in the will of a deceased person. An individual may be entitled to a distribution from the estate of someone who has died intestate. Money, digital assets, and personal effects are all examples of property.

This means that any assets (money or property) received by one or both during their marriage or relationship do not automatically belong solely to the recipient. Such bequests may, and often will, be considered as joint assets of the relationship.

So, what is the likely outcome of inheritance in a Perth family law separation?

Inheritances Received During a Marriage / De Facto Relationship

There are certain factors that the Court will consider when deciding the percentage or amount of inheritance to be given to the non-receiving party. These are some of the matters that will be under consideration.

• The timing of receiving the inheritance in Perth is important. The earlier the couple receives it, the more likely it will be that the intended receiver will receive a greater percentage of it.
• Is the inheritance mixed with marital/relationship finances
• Did the inheritance go to the partner or the marriage, or was it a bequest for the individual?
• Are the proceeds of the bequest used to benefit the marital home in general?
• Is the inheritance being invested in a way that provides additional financial benefits to the whole family?
• Is the inheritance intact in its original form?

The next consideration will be the available assets for distribution. If the assets of the couple are small but the inheritance is large, the court may designate more of the inheritance as marital property that can be distributed to the spouse. The following accountings will be required by the Court:

• Both parties can contribute financially to the relationship
• Other financial contributions to the family, i.e., parenting responsibilities, home management etc.
• Superannuation and retirement accounts: What is their value?
• Future needs of both the parties and any children resulting from it

Inheritance Received After a Relationship

Importantly, like all property settlements, the value of the net asset pool is calculated at the time of trial and not at the time of separation.

This presents obvious problems for the party receiving an inheritance in Perth near separation or after separation but before financial settlement with their former partner.

Most separated parties resolve their property issues quickly after separation. There are situations in which parties divorce, and it takes many years before a financial settlement is completed. One party may receive an inheritance during this time. In this case, there could be significant consequences for the financial settlement.

If the parties have not separated but they have not made a formal financial settlement (property settlement), and one party inherits an inheritance from another party, the Court is unlikely to treat that inheritance as protected property.

The Court will likely consider inheritance as a financial resource that the inherited party will be able to benefit from and may give the non-inherited party a greater share of the net asset pool.

Avoiding such situations is strongly recommended. You can formalise and finalise your property settlement by using consent orders or a financial agreement. Contact our Perth family lawyers today for assistance.

Options to Protect an Inheritance Received During a Relationship

If spouses wish to make an agreement regarding future inheritance rights, they can do it through a Financial Agreement. This agreement follows the Family Law Act 1975. It is strongly recommended that you consult legal counsel if you or your partner want to enter into such an agreement. To be valid and enforceable, the agreement must comply with very strict requirements. These requirements include:

1. It must be in writing and consistent with the Family Law Act
2. Before signing, both parties must have been advised of an attorney
3. Both parties must understand the effect of the agreement
4. Both parties must clearly understand the benefits and consequences of the agreement.
5. This financial agreement can be used to protect assets.
6. A marital asset pool must not include an inheritance or anticipated inheritance unless it is specifically mentioned.
7. You can exempt any financial asset from the asset pool either completely or in part.

Summary

Almost always, inheritances in Perth received before or during a relationship are considered assets that can be distributed among the parties. However, inheritances received after separation are not usually included in the main asset pool and may be put into a separate pool.

In order to determine the contribution of each party, the receipt of a substantial inheritance will be significant. An inheritance, whether received after separation or not, could influence the determination of the future needs of the parties.

Once the parties have been assessed on their net assets, contributions made, and future needs, a court must then decide whether the proposed net asset split is fair and equitable.

Seek Legal Advice Early

If you need help with a family matter regarding inheritances, or you anticipate receiving an inheritance, or you’re considering separation, we recommend seeking legal advice from an experienced family attorney as soon as you can.

Burra-Robinson Family Lawyers’ experienced team of family lawyers in Perth are experts in property settlements. They can help you with matters such as inheritances from relationships or drafting financial agreements to protect your inheritance. Get in touch with our Perth law firm today.