When a couple divorces or separates, any communal or shared property is usually divided equitably between each party. Any property that was owned, and more importantly dealt with, separately may be retained by that owner.
When one or both people have inherited money before or during the life of their relationship, there may be questions about dividing this inheritance as part of a property settlement.
We provide straightforward guidance on how to protect your assets before, during, and after separation. Call us today on 03 9878 5222 for a free consultation with our family lawyers in Melbourne.
Understanding inheritance and separation
Here is a possible scenario where the issues of inheritance and separation intersect.
An elderly married couple have a son who may be facing divorce. They are worried that if their son inherits from them and then divorces his spouse, his ex-wife may take a portion of his inheritance in their settlement. They do not want this to take place but aren’t sure how to protect their assets.
In this instance they have three options available to them:
- They can do nothing and hope that a Court-ordered divorce settlement will not include any inheritance their son may receive.
- They can speak to their son about the situation and explain that they want to protect his interests, so that their son can contact a family lawyer to draw up a Financial Agreement with his spouse.
- They can also set up a Testamentary Trust Will.
A Financial Agreement can outline that if their son inherits from them during his marriage, that this inheritance should not be included as part of any matrimonial property.
If a Financial Agreement is done properly, it will protect any inheritance from an ex-spouse and under the jurisdiction of the Family Court.
What happens when inheritance money has been used by both parties during a marriage?
When an inheritance is received before or during a marriage and deposited into a joint bank account and used for joint expenses, it may be considered a marital asset due to how it has been used.
- Depositing funds into a joint account and using these funds to pay for joint expenses is known ‘commingling’.
- Commingling can lead to an inheritance being considered joint property and potentially subject to division following a divorce.
If you think you may encounter a situation where there will be a challenge for your inheritance, it is wise to contact an experienced family lawyer for advice.
Speak to Rose Lawyers about protecting inheritance during divorce
If you are looking to protect the interests of your children or beneficiaries, it is wise to consider working with family lawyer to draw up a Financial Agreement.
Ever wondered what an executor of a Will does, what their rights and responsibilities are, if they can be a beneficiary of a Will and if they charge anything? Drawing…Read more
COVID-19 – Links & Resources For Victims Of Domestic Violence The COVID-19 pandemic social isolation measures to ‘flatten the curve’ are reportingly causing an unprecedented and alarming surge in domestic…Read more