If the inheritance was in a bank account on the date of marriage, keep a copy of the bank statement showing the balance. If the inheritance was invested into other assets, keep proof that you purchased assets with the inheritance, and the value of those assets on the date of marriage.
This information can be very difficult to find years down the road, so do it right away. Do not invest the money you inherited into a home you will be living in with your spouse this includes not paying down the mortgage.
If you do, and if you still live with that spouse in that home on the date of separation, you lose your deduction. Do not use the inheritance to pay off any joint debt. Do not deplete the inheritance until after you are married.
You only get to exclude the value of the account or assets traceable to the inheritance that still exist on the date of separation. Marriage contact The above recommendations can be very restrictive on how you can use your inheritance and also protect it. Common law spouses should also be mindful of ways to protect their inheritance.
If you are not married, and want to protect an inheritance, you should: Keep proof received an inheritance. For example, keep the Will and any letters from the Estate Trustee confirming what you will receive; open a separate account, in your sole name, for the inheritance; keep proof that you deposited the inheritance into the account; If the inheritance is invested into other assets, keep proof that you purchased assets with the inheritance.
Do not invest the money you inherited into any joint assets with your partner. Don not use the inheritance for joint day to day expenses. Do not invest the money you inherited into the home you will be living in with your spouse. Do not pay down the mortgage on jointly owned property, or the home you live in with your spouse.
Do not pay down joint debts. Cohabitation Agreement The above recommendations can be very restrictive on how you can use your inheritance and also protect it. Author s. Family Law. Have Questions? Our team of expert family lawyers are highly experienced in all divorce situations. Please get in touch to see how we can help you. F: 07 Liability limited by a scheme approved under professional standards legislation. A Consent Order The simplest and most stress-free way for two former spouses to come to an amicable agreement regarding any property settlement , including inheritance, is through a consent order.
When Was the Inheritance Received? Before An inheritance received by one party prior to the relationship or around the time the relationship commenced is more likely to be treated as an initial financial contribution to the relationship or marriage.
During If the inheritance was received during the relationship or marriage, its distribution depends on how the money was used as well as the intentions of the benefactor.
Late or After Any inheritance received late in the relationship towards the end or after separation will not be viewed as a financial contribution to the asset pool. What Were the Intentions of the Benefactor? Size of the Asset Pool The size of the asset pool compared to the size of the inheritance received can influence the way the property is dealt with during a divorce settlement in Australia. Speak to a Lawyer About Your Inheritance and the Divorce Settlement Process in Australia The distribution of inheritance during a divorce settlement in Australia is completely circumstantial and many factors must be considered.
Capital Gains Tax CGT is probably the most significant tax to consider when negotiating and agreeing a financial settlement Share this article. These regular payments from you to your ex, or vice versa, are designed to bridge inequalities in your incomes. How much— and how long — varies from case to case, requiring expertise guidance. Divorce financial settlement is a general term for sorting out all the different financial consequences of a divorce.
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