When Does an Inheritance Become Marital Property?

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An inheritance received by one spouse during a marriage is generally considered separate property. 

However, there are circumstances where an inheritance can lose its separate status and become marital property subject to division in a divorce. 

This can occur if there is ‘commingling’ of the inheritance with marital assets (such as depositing it into a joint bank account or using it to purchase a jointly owned property).  

Additionally, a very lengthy marriage where the inheritance has been used for the benefit of both spouses over time may dilute its separate property status. 

Are There Specific Laws That Determine When Inheritance Becomes Marital Property?

Yes, there are specific laws in Queensland that govern how inheritances are treated within the context of divorce and property settlements. Here’s an explanation:

What Happens to Inheritance in the Event of a Divorce or Separation?

How an inheritance is treated in a divorce or separation depends on several factors. Inheritances are initially considered the separate property of the spouse who received them. 

However, if the inheritance was commingled with marital assets (like putting it into a joint account), used to buy jointly owned property, or if the marriage was very long-term, the court may consider it part of the divisible asset pool. 

Inheritances received after separation but before a property settlement is finalised must be disclosed as a financial resource but may not be automatically divided. 

Ultimately, the Family Court aims for a “just and equitable” outcome, considering the initial contribution of the inheritance, the contributions of both spouses throughout the marriage, and the individual financial needs of each party.

For complicated matters like this, it is always best to speak with a competent will lawyer to make sure your inheritance is protected.

Also read: 3 Essential Questions about Property Settlements QLD

How Does the Length of the Marriage Impact Inheritance as Marital Property?

The length of a marriage plays a significant role in determining how an inheritance is treated in a divorce proceeding. 

Generally, the longer the marriage, the less likely an inheritance will retain its entirely separate property status. This is because the court places increasing weight on the contributions both spouses have made over time. 

If the inheritance was received early in a long marriage and has been used for the benefit of both partners (e.g., invested in the family home), the court may be more likely to view it as having become part of the marital asset pool. 

However, with shorter marriages, there’s a stronger argument for the inheritance to remain the separate property of the spouse who received it.

Can the Intent of the Giver Impact Whether Inheritance Is Considered Marital Property?

While the intent of the person who gave the inheritance can be a factor the court considers in Queensland, it’s not usually a decisive one. 

The primary focus is on how the inheritance has been managed during the marriage. 

For example, if the will clearly stipulated the inheritance was intended solely for one spouse, the court might take that into account. 

However, if the inherited assets have been mixed with joint finances, invested in jointly owned property, or used to support the family over a long period, the initial intent of the giver may have lesser weight. 

Ultimately,  the court prioritises a just and equitable division of assets based on the overall circumstances of the case.

Also read: What Are Testamentary Trusts and Why Do They Matter?

Walker Pender Secures Favorable Verdict for Client in Inheritance Dispute

The client faced the challenge of keeping land inherited from their parents separate from marital assets during a divorce settlement. Through our legal expertise, we were able to achieve a verdict that excluded the inherited land from the marital pool of assets.

This positive result hinged on two critical factors. Firstly, the land was gifted to our client by their parents well before the marriage. This established the property as separate ownership from the outset, distinct from any assets acquired during the marital union. Secondly, the marriage itself was relatively short-lived. The brevity of the marriage strengthened our argument that the inherited land remained separate and wasn’t financially commingled with marital assets or used for the joint benefit of the couple.

By effectively presenting these arguments in court, we secured a verdict that protects our client’s inheritance rights. The court recognised the pre-marital nature of the inheritance and the limited timeframe of the marriage, ultimately excluding the land from the division of marital assets.

Does Your Inheritance Risk Becoming Marital Property?

Understanding how inheritances are treated during divorce is crucial to protect your rights.  Factors like when you received the inheritance, how it was used, and the length of your marriage all play a role in determining its status.

Don’t leave your inheritance to chance. The skilled family law experts at Walker Pender can guide you through the complexities of Australian property law. We’ll fight to safeguard your assets and ensure a fair and just outcome.

Contact us today for a personalised consultation.

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