Inheritance is unfortunately not a protected asset and can be considered a marital asset and part of the overall property pool that needs to be divided upon separation or divorce.
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.
In most cases, a person who receives an inheritance is under no obligations to share it with his or her spouse. However, there are some instances in which the inheritance must be shared. Primarily, the inheritance must be kept separate from the couple's shared bank accounts.
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.
The law considers inherited property to be a personal gift to the recipient and a spouse or domestic partner has no claim to it. When couples divorce, the inherited property generally stays with the person who inherited it. But inherited property must retain its character as separate throughout the marriage.
The inheritance does not need to remain separate. If you are inheriting from your parents and you'd like to share it with your spouse, you can literally “put their name on it.” If it's real estate, you can add them to the deed. If it's a bank account, make it a joint bank account. This process is called commingling.
In conclusion, estate beneficiaries aren't required to share their inheritances with siblings, but they might want to do so for many personal reasons.
To protect an inheritance you receive during a relationship, you could get a binding financial agreement created. This agreement could allow you to quarantine the inheritance and keep it separate from the rest of the assets you bring into the relationship.
Inheritances are considered separate property and are not subject to division in a divorce providing the inheritance is kept separate. During happier times, spouses are in the habit of depositing an inheritance into the couple's joint bank account.
The Federal Reserve's 2019 Survey of Consumer Finances (SCF) found that the average inheritance in the U.S. is $110,050. “Studies looking at inheritances show that the range of money left behind ranges dramatically,” Hopkins said, and if you compare the average to the median, you get a much different story.
Do NOT deposit the inheritance into a joint bank account. Instead, deposit the funds into a separate bank account with only your name on it and ensure the money is not commingled with any marital property.
It is possible that the testator bequeathing the inheritance specified in their will that it was to be given to both spouses as a couple. Therefore, in a case such as this, the inheritance is a shared asset and a contribution that both parties have made to the relationship.
There are no inheritance or estate taxes in Australia. However, you may have tax obligations for the assets you inherit: capital gains tax may apply if you dispose of an asset inherited from a deceased estate. income tax applies as usual to any dividends or rental income from shares or property you inherited.
The de facto spouse will inherit everything if the deceased had no children. Where there are children, the de facto spouse will inherit a prescribed amount, and then share the residue of the estate with any children.
While many countries have an inheritance tax, Australian law is unique in that there is no tax law of inheritance. Any assets that are passed down to family members, will not be taxed – whether the assets are financial, property or otherwise.
Keep separate accounts, but make equal payments
Many couples find it easiest to maintain separate financial accounts with their own funds. From there, they contribute equally to shared expenses.
Couples hardly ever decide on a 50/50 divide, in reality. There is no predetermined percentage split allowed by the Family Law Act of 1975; each case will be handled differently. The most typical division, however, is a 60/40 split.
In summary, a wife in a divorce settlement in Australia is entitled to a fair and equitable share of the assets and property accumulated during the marriage. This may include a share of the family home, vehicles, savings, and investments, and any superannuation that has been accumulated during the marriage.
If the deceased person was survived by a spouse and no children, the spouse is entitled to the entire estate. If the deceased person was not survived by a spouse or children, the assets will be distributed to their next of kin.
If a parent wants to leave one sibling out of the will, this is legally permissible. There is no rule on disinheriting a child. However, to avoid legal challenges by a disinherited sibling, a parent should consider discussing the matter with the child or explaining the reason in the will.
Does the legislation allow siblings to receive a greater share of the assets? There is no legal requirement in NSW for a parent to distribute their estate equally among their children.