Is Your Inheritance part of your Marital Assets?

Rose Lawyers on 15 August 2016

Whether you're married or in a de facto relationship, separating from your partner is never easy. And when it comes to dividing the property and assets, things can go from bad to worse.

Everyone wants to protect their own interests, so disagreements about how to divide assets occur very often. When you have property that you wish to keep, such as an inheritance you have received, you need to know where you stand legally.

Every case is different, but here is our guide to what can happen to your inheritance when you separate from your partner or spouse.

Can you keep your inheritance if you get divorced?

It is possible that you will be able to keep inheritance that you received while married when you get divorced, but it will depend on your circumstances.

One way you can keep your inheritance is to come to an amicable agreement with your former spouse about how to divide the marital assets. This will likely require some negotiation and compromise from both parties, and you can formalise the agreement by applying for consent orders through the Family Court or signing a Binding Financial Agreement with lawyers.

If you cannot come to an agreement, then it will be up to the Court to determine whether or not your inheritance is considered part of the pool of marital assets to be divided or whether it is solely your property.

In most cases, only one member of a couple is named as a beneficiary of the Will of the deceased party, who is often a parent or other family member. It is also very common for the funds to be used for the betterment of the family, such as house renovations, holidays or even just bills and household expenses. When this is the case, the Court will often count the inherited asset as a contribution to the marriage made by the person who inherited it, so it would not necessarily be returned to them when the marital assets are divided.

On the other hand, if the beneficiary took steps to quarantine their inheritance from the rest of the family assets, the Court will be more likely to recognise this and allow them to keep the inheritance. This means that the inherited asset can not be used for the betterment of the family, and family assets cannot be used for the betterment or management of the inherited asset.

In the rare case where an inheritance is clearly given to both member of a couple, it is likely that the asset will be part of the general pool of assets to be divided between the parties.

assets house car divided

Is your inheritance part of your marital assets?

Whether the inheritance will be treated as part of your marital assets or separate will depend on your situation. Some of the factors that the Court may consider include:

  • Time since the inheritance – If a long time has passed between the inheritance and the separation, the asset is more likely to be treated as part of the family assets.
  • The intentions of the deceased – If the deceased had specific intentions for how the beneficiary should use the inheritance, then this may be relevant to how to how it is divided. For example, they may have intended the inheritance to benefit the whole family, not just the named beneficiary.
  • Who helped care for the deceased – If the spouse of the beneficiary also helped to care for the deceased, for example if the deceased lived with them, then it's more likely that the assets will be treated as belonging to the family.

Every case is different, and there may be unique factors in your case that will be taken into account.

How are marital assets divided?

infant in car

Child custody arrangements will be decided by the Court if you cannot agree with your former spouse.

If you and your former spouse cannot agree on how to divide your marital assets, including inheritance you have received, you will normally need to attend family dispute resolution before Court proceedings can take place. Coming to an agreement before going to Court is the best way to minimise the emotional and financial stress involved.

If coming to an agreement is impossible, then you can apply for property orders through the Courts. There is no formula for how a judge will decide to divide the asset; they will decide what is just and equitable when all the evidence and unique facts about your case have been heard.

If your inheritance was of particular sentimental importance to you, it is possible that the judge will take this into consideration. Some of the other factors they will consider include:

  • Financial contributions to the marriage made by each party, both direct and indirect.
  • The responsibilities each party had for things like childcare and homemaking.
  • The future needs of each party, including age, health, and financial resources.

The financial order that you receive will always depend on your unique circumstances.

Get expert family law advice

Getting advice from a divorce lawyer will ensure that all your legal bases are covered.

At Rose Lawyers, we have decades of experience helping our clients protect their interests when going through a divorce. Our family lawyers will handle your case with the care and sensitivity that it requires.

For expert advice on your divorce and inheritance, call Rose Lawyers on 03 9878 5222.