Are you looking for legal ways to keep your legacy safe, or do you want to know if you have to share your inheritance with your spouse?
Now is a good time to get your facts straight and your paperwork in order – it can affect your future, for better or for worse.
This detailed article, compiled by our team of law experts, will equip you with all the facts about inheritance protection and explain your legal rights concerning your legacy so you can make informed decisions.
3 Ways to Safeguard your Inheritance.
1. Know how to keep your inheritance safe during a divorce
The quickest and easiest solution to protecting your inheritance is to discuss the matter openly with your former partner and reach an amicable agreement.
You may consider seeing a family mediation lawyer, or seek advice on signing the correct documents to ensure protection for your inheritance.
If you reach an understanding with your ex-partner, you both sign consent orders with the family court or a binding financial agreement with your lawyers. If negotiations between you fail, and if attempts to resolve conflict through mediation are also fruitless, you can apply for property or financial orders.
A note on property and financial orders:
The Family Law Act 1975 (Cth) (the Act) explains in detail all the factors the Court considers when they decide on dividing property. Matters such as what the contributions were, and the future needs of both parties, affect the court’s decision. It is best to get legal advice when applying for property or financial orders.
Tip: Protect your property
Expert legal help can get a Court Order in place to stop your money from being spent or your property from being sold during a separation process.
Book your Free 15-Minute Consultation now.
2. Learn what the law says about your inheritance
Under the Act, your inheritance is regarded as part of your family’s pool of assets to be considered when a property settlement is negotiated. Australia’s Family Court assesses each case individually as everyone’s circumstances are different.
Your inheritance may be:
- divided between you and your ex-partner or,
- you could be the sole beneficiary.
For example, if you received cash as an inheritance, the Court may see it as a financial resource you could use to support yourself after separation – a benefit your ex-partner does not share. As this places you in a financially stronger position than your ex-partner, the Court will take it into account when dividing the assets.
However, the Court will also consider how long ago you received your inheritance before making a decision.
The timing of your inheritance:
If you’ve received your inheritance before or early in your marriage
If you’ve received your inheritance before, or very early during your marriage or de facto relationship, chances are it will be viewed as a personal asset you contributed to the relationship. So, if you separate, your inheritance will be part of the pool of assets shared between you and your ex-partner.
If you’ve received your inheritance during or after your relationship ended
If you were made a legacy late during your marriage or even after you have separated, your inheritance is usually not viewed as a financial contribution to the asset pool the asset pool. However, the size of the asset pool is taken into account to ensure distribution between parties is fair:
- If the combined family assets amount to less than your inheritance, your inheritance could be seen as part of the asset pool. The reason is that both parties contributed financially during the relationship, so it may seem unjust to divide the assets without including the inheritance.
- For instance, if the person who has not received the inheritance made the largest financial contribution, the inheritance may be included in the asset pool to ensure a fair split.
Other points the Court will consider that will affect what happens to your inheritance during separation are:
- The intention of the person who left the inheritance
If the person who left you an inheritance had specific stipulations about how it should be used, it will have legal implications to how it is shared.
- The person/s who took care of the deceased
If the deceased lived with you and your ex-partner, for instance, and your ex-partner helped you take care of that person before they passed away, your inheritance will most likely be viewed as part of the family assets.
- What the inheritance was used for during the relationship
Where the inheritance was used by the family to, for instance, maintain or renovate the shared home, or for daily expenses, it will be seen as a contribution to the asset pool made by the person who received the inheritance.
3. Know your best option – a Binding Financial Agreement or Consent Orders
Binding financial agreements and consent orders are both legally binding ways to settle any property matters you may have.
Binding Financial Agreement
- A Binding Financial Agreement is a contract between two people and operates independently from the Court or anyone else.
- By signing a binding financial agreement, married couples or those in de facto relationships agree to manage their finances themselves during their relationship.
- The agreement also include details on how the assets are divided and what each party’s financial obligations are in case of a breakup.
- The terms of a binding financial agreement doesn’t have to be fair, for instance; one party may receive a more substantial settlement than the other.
- It is an agreement that doesn’t pertain to parental matters.
- There are formal requirements to be adhered to, and both parties need their separate lawyers to sign the binding financial agreement; otherwise, it is invalid.
Benefits of signing a binding financial agreement:
- A binding financial agreement is helpful in all kinds of relationships, but especially if you have an inheritance, you would like to keep separate from the assets you bring into a marriage or de facto relationship.
- It is especially popular with people entering into a second marriage or those deciding to live together. They may have experienced the negative effect of not having signed an agreement before and now want to avoid making the same mistake.
- It provides security, peace of mind and saves a lot of time and money as couples will not need a lawyer in future, or to go to court.
- Although it is advisable to sign a binding financial agreement before you get married or move in with your partner, you can do so at any time; during your marriage or de facto relationship and before or after separation.
- Consent orders are filed in court.
- The Court will only make orders on matters that the couple have agreed upon and if the Court deems the terms fair and just.
- Consent orders cover financial matters, such as inheritance protection and parental issues.
Benefits of signing a consent order:
- You can draw up consent orders as a couple, and you don’t need a lawyer as a witness, unlike a binding financial agreement.
- By signing the consent orders, you in effect agree to the terms as set out in the document, and once the court approves it, it’s legal.
- You don’t have to go to court to apply for consent orders.
Tip: Get a property settlement
There is a time limit to applying to the Court regarding a property settlement. If you are married, it’s within 12 months of your final divorce date, and if you are in a de facto relationship, it’s within two years of the date of final separation.
Contact Rose Lawyers to help you with any questions you may have about whether you should be sharing your inheritance with your spouse or if you need a family lawyer to meditate a separation for you. Book your Free 15-Minute Consultation now.