Some may people or family members may ask themselves “does inheritance have to be shared with a spouse?”. The answer to this depends on a variety of factors. Mainly, it depends on the point in the marriage at which the party received the inheritance. Inheritance is not a protected asset or property in family law matters like property settlements. This applies to both de facto partners and married spouses.
So, how can one protect his/her inheritance from his/her spouse? The best form of defence a person can take is to sign a contract with his/her spouse. In Australia, couples can make a financial agreement before or during a de facto relationship or marriage. So, does inheritance have to be shared with a spouse? No. But, both couples may make a financial agreement where they can amicably divide it if they wish to do so.
Parties can draw up a financial agreement to exclusively confine an inheritance, leaving out all other marital assets accumulated during the course of a relationship. Financial agreements are the only option the law gives one spouse hoping to secure their inheritance. Read on to know more information about ’does inheritance have to be shared with a spouse?’.
What Can the Federal Circuit and Family Court of Australia Do?
The Federal Circuit and Family Court of Australia (FCFCOA) is responsible for handling family law matters. It handles a wide range of family law cases that are related to divorce, financial matters, property settlements, parenting matters, and inheritance disputes on Wills and estates.
But, how can they help a person asking “does inheritance have to be shared with a spouse?” They may do either of the following when couples have separated:
1. Quarantine the Inheritance
The spouse who receives an inheritance will get to keep it. They can distribute the other assets of the parties based on the contributions of the parties and their anticipated future needs. Most parties involved in a separation or divorce have difficulty restoring their wealth in order to meet a reasonable standard of living. Click here to read our blog about future needs in family law.
2. Including the Inheritance in the Property and Asset Pool
Except in exceptional circumstances, the court will view the inheritance as a contribution made by the inheriting spouse. However, it will not compensate that spouse for the whole sum of the inheritance. The spouse of the heir can receive a larger portion of the inheritance fund merely as compensation for their involvement in the bequest.
Does Inheritance Have to Be Shared With a Spouse Through Consent Orders?
Does inheritance have to be shared with a spouse if couples use a consent order? They can make such agreements if they wish to. A consent order is the quickest and least stressful means for two ex-spouses to reach a fair settlement regarding inheritance. The matter won’t move to family court until both parties have at least attempted to negotiate.
If they are unable to reach an agreement, the court will determine the division of the inheritance in the divorce settlement. In Australia, there are a number of considerations to take into account when determining how much money will go to each spouse entitled to receive inheritance.
Determining When a Party Received the Inheritance
The main question to ask when dealing with inheritance during a divorce settlement in Australia is “when did the person receive the property or inheritance?” Let’s say, for instance, one party received an inheritance from a family member before a divorce. Courts will see this as a financial contribution to the couple’s relationship. If a party acquired inheritance before a divorce, they cannot take it out of the asset collection.
Now, what if the party obtained inheritance during their relationship? The way they divide it depends on two factors – how they spent the money, and the intentions of the donor. Let’s suppose that the parties used the funds for family vacations, family home improvements, or other regular family needs. This will result in the spouse receiving some portion of the inheritance as they made a financial contribution in the relationship.
If they receive inheritance late in the relationship or after their divorce, they need not take it into account when calculating the property pool or asset pool’s value.
Property settlement is the process through which ex-spouses settle their finances and assets in their asset or property pool. Inheritances that were received either before or very early on in the relationship are much more likely to be treated as an initial contribution by the beneficiary, especially in longer relationships. In fact, early contributions of an inheritance can have little to no impact on the beneficiary’s property settlement entitlements.
Rights of De Facto Partners
When talking about ‘does inheritance have to be shared with a spouse’, it’s important to consider intestate estates. When a person passes away intestate (without a Will), the courts may appoint an administrator who can distribute their estate in accordance with local or state laws.
A de facto spouse has essentially the same inheritance rights as a married spouse under this legal formula. If the deceased had no children, everything will pass on to the de facto spouse. Where there are children, the de facto spouse inherits a certain sum before children obtain their share of the remaining inheritance.
Contesting a Will
A person contests a Will when they feel like they should receive more of what the Will originally gave them. For example, if a Will-maker mentions a de facto partner in a valid Will, other beneficiaries and potential beneficiaries, such as the deceased person’s children, may contest that Will. They may file a claim with a family lawyer stating that the deceased had a moral obligation to provide adequately for them.
Wills That Include Ex-de Facto Partners as a Beneficiary
When talking about ‘does inheritance have to be shared with a spouse’, it’s important to consider the possibility of ex-de facto partners named as a beneficiary. The breakdown of a de facto partnership is less certain than a legal divorce. Thus, while the dissolution of a formal marriage through a divorce will automatically override a Will, this does not necessarily apply for de facto relationships.
Does A Party Have to Share Inheritance With a Spouse: Case Example
Mr and Mrs Granger appeared in court in the case of Granger & Granger (2018) to divide the assets of their 40-year marriage. Each of them received a financial inheritance from one of their parents. Ms Granger received $700,000 in 2011, while Mr Granger received $176,750 in 2005. Ms Granger received a sizable inheritance, 18 months before the marriage dissolved in the early months of 2013.
The court determined that Ms Granger’s request to exclude her inheritance from the divisible marital property would not adequately recognise Mr Granger’s contributions to the marriage. He had invested poorly and lost the majority of his inheritance. Hence, it was considered to be a portion of the asset pool that might be divided.
Family Court Conclusion
The $1.5 million asset pool also included a sizable amount of Ms Granger’s inheritance. The court decided to include Ms Granger’s inheritance in the asset pool split between the parties in order to not undervalue the husband’s contributions. The judge found that Ms Granger was entitled to 60% of their rights, while Mr Granger was entitled to 40%.
Seeking Legal Advice From A Family Lawyer
We at JB Solicitors continue to answer and resolve complex questions like “does inheritance have to be shared with a spouse?”. People value whatever inheritance they receive in a Will. Furthermore, they can decide whether to share it with their spouse or not. However, disputes arise between couples regarding inheritances, when both are not on the same page on how to divide inheritances.
While it is obvious that court procedures are the way to resolve this, there are methods where couples won’t have to spend money on expensive court fees. Our team of family lawyers offer mediation and arbitration services where couples can decide on how to deal with inheritances after their divorce. We have fixed fees for matters like property settlement, divorce, or splitting inheritances in an asset pool.
Consult with a family lawyer today.