Receiving an inheritance during or after a relationship can raise an urgent question: does it have to be shared? The answer depends on the facts of the case, and getting legal advice early matters, because the time limits for applying for a property settlement are fixed.
Under the Family Law Act, property settlements consider what each person contributed to the relationship, including indirect financial contributions such as gifts and inheritances from family. An inheritance is not automatically excluded from the asset pool, and it is not automatically shared equally with the other party, according to the Federal Circuit and Family Court of Australia. How it is treated depends on when it was received, how it was used and what other contributions each party made.
Our lawyers in Springfield help clients across Greater Springfield and Ipswich with property settlements after separation.
Here is how inheritances are generally treated in a Queensland property settlement, and what the time limits mean.
Key takeaways
- An inheritance is a contribution the court can weigh in a property settlement.
- There is no formula for deciding how much weight an inheritance carries.
- Married couples have 12 months from a divorce order to apply for property orders.
This article is general information only and is not legal advice. Every situation is different, and you should speak with a solicitor about your own circumstances.
What role does an inheritance play in a Queensland property settlement?
An inheritance is treated as a contribution on behalf of the person whose family gave it, whether it was given to one of them or both, according to the Federal Circuit and Family Court of Australia. It is not automatically separated from the rest of the asset pool, and no property or debts are excluded from the court's consideration regardless of how or when they were acquired.
The court identifies all property and liabilities of the parties, assesses what each person contributed before, during and after the relationship, and then considers current and future circumstances, under the Family Law Act. Contributions the court weighs include direct financial contributions such as property brought into the relationship and earnings, indirect financial contributions such as inheritances and gifts from family, non-financial contributions such as renovations or running a business, and contributions to the welfare of the family such as caring for children and housework.
There is no formula. The Federal Circuit and Family Court of Australia has stated clearly that it does not use a formula to divide property and finances, and that no one can say in advance what orders a court will make.
Does it matter when the inheritance was received?
Timing is one of the facts the court weighs, though it does not determine the outcome on its own. An inheritance received early in a long relationship may carry less weight in the final division because, as the Legal Services Commission of South Australia notes, a gift or inheritance becomes less significant as it is mixed with other property and as the other person contributes directly or indirectly to its maintenance or improvement.
In a short relationship, by contrast, an inheritance or pre-relationship asset may carry more weight. Legal Aid New South Wales notes that substantial initial contributions are likely to carry more weight in a short relationship than a long one, and that there is no presumption of equal division.
An inheritance that has not yet been received at the time of a settlement may be treated differently again. Legal Aid New South Wales describes an anticipated inheritance as a financial resource rather than property. Financial resources are not divided by the court, but they can be taken into account as part of the overall picture of each party's circumstances.
What are the time limits for applying in Queensland?
Married couples: applications for property orders must generally be made within 12 months of a divorce order taking effect, according to the Federal Circuit and Family Court of Australia.
Nullity: within 12 months of a decree of nullity being made.
De facto couples: within two years of the breakdown of the relationship, according to the Federal Circuit and Family Court of Australia.
An application made outside these time limits requires the Court's leave, which is not always granted. The time limits apply to making an application for property orders; they do not apply to child support or child maintenance.
A property settlement does not require a divorce to be finalised first. Married couples can negotiate and document property arrangements even before divorce proceedings are complete, according to the Federal Circuit and Family Court of Australia.
How does the process of settling property generally work in Queensland?
Our conveyancing team assists clients with the property transfer steps that follow a family law settlement agreement or order.
Step 1: Talk to us
Get in touch and we'll explain how the process generally works and what the next steps look like.
Step 2: Identify and value the asset pool
We work through all assets and liabilities with you, including any inheritance, gifts from family, superannuation, real estate and debts, and assist with gathering the financial disclosure each party is required to provide.
Step 3: Reach an agreement or apply for orders
Where both parties can agree, we assist with documenting the settlement as consent orders, which the Federal Circuit and Family Court of Australia makes legally binding. Where agreement cannot be reached, we advise on the application process.
Step 4: Transfer the property
Once orders or an agreement are in place, we handle the title transfer, any stamp duty lodgement and the registration steps that complete the settlement.
| Get in touch Need help with a property settlement? We're an experienced team who keep you well informed at every stage of the process. Get in touch to discuss your needs. |
When does an inheritance carry more or less weight?
The court weighs an inheritance against the whole picture of contributions and circumstances. The Legal Services Commission of South Australia notes that a person is not always entitled to keep gifts and inheritances from family, and that a gift is seen as a contribution on behalf of the person whose family made it.
Several factors can affect how much weight it carries in a particular case:
- › Length of the relationship: in a longer relationship, an inheritance received early tends to become less significant over time as it is mixed with shared property and efforts.
- › How the money was used: an inheritance kept in a separate account may be treated differently from one used to pay down the shared mortgage or fund a jointly used asset.
- › The other party's contributions: even where one person received an inheritance, the court also weighs the other party's non-financial and welfare contributions, according to the Federal Circuit and Family Court of Australia.
- › Contributions made after separation: Legal Aid Western Australia notes it may be possible for contributions made after separation to be kept separate or treated as a distinct pool, and describes this as a complex area.
- › Future circumstances: the court also considers each party's current and future circumstances, including income, earning capacity, health and care of children, under the Family Law Act.
When does an inheritance not change the outcome at all?
The court's task is to reach a result that is just and equitable in all the circumstances, under the Family Law Act. In some situations, an inheritance may be present in the asset pool but carry little practical weight in the final division.
Where a relationship was very long and both parties made substantial ongoing contributions, the relative importance of a single inheritance received early in that period may be modest compared with everything else the court is weighing, according to Legal Aid New South Wales. Similarly, where an inheritance was fully mixed with shared assets over many years, it may be difficult to distinguish its value from the rest of the pool.
The court may also assess contributions against the whole pool rather than asset by asset, unless the circumstances, such as a short relationship or largely separate finances, make an item-by-item approach more appropriate, according to Legal Aid New South Wales.
"An inheritance is treated as a contribution on behalf of the person who received it, but there is no rule that keeps it separate from a property settlement. The weight it carries depends on the whole picture of the relationship."
Jade Kickbusch, Principal, Brookwater Legal
Can a financial agreement protect an inheritance?
A binding financial agreement made under the Family Law Act is one way couples document how property will be dealt with if the relationship breaks down, including inheritances a person may receive in the future. Legal Aid New South Wales notes that a financial agreement can protect an inheritance that a person may receive in the future, and that a court can set one aside only in limited circumstances.
For an agreement to be binding under the Family Law Act, each party must have received independent legal advice from an Australian lawyer before signing, and a signed statement from that lawyer must be given to the other party. Agreements that do not meet these requirements may still be declared binding by a court in some circumstances, but the process is not straightforward.
A financial agreement is made outside of court and removes the court's jurisdiction over those financial matters if it is binding. It is fundamentally different from consent orders, which are court orders made by agreement and have the same legal force as orders made at a hearing.
Frequently Asked Questions
Is an inheritance included in a Queensland property settlement?
An inheritance can be included, according to the Federal Circuit and Family Court of Australia. No property is automatically excluded from a settlement, and an inheritance is treated as a contribution by the person whose family gave it.
How long do married couples have to apply for a property settlement in Queensland?
Married couples generally have 12 months from the date their divorce order takes effect to apply for property orders, according to the Federal Circuit and Family Court of Australia. Applications made after that time generally require the Court's permission.
How long do de facto couples have to apply for a property settlement in Queensland?
De facto couples generally have two years from the breakdown of the relationship to apply, according to the Federal Circuit and Family Court of Australia. Applications made after that period generally require the Court's leave, which is not automatic.
Does an inheritance received before the relationship still count in a Queensland property settlement?
An inheritance or other asset held before the relationship is treated as an initial contribution, according to Legal Aid New South Wales. In a longer relationship its weight generally decreases over time as both parties contribute to the shared asset pool.
What is an anticipated inheritance in a Queensland property settlement?
An anticipated inheritance that has not yet been received is generally treated as a financial resource rather than property, according to Legal Aid New South Wales. Financial resources cannot be divided but can be taken into account in the overall assessment.
Do you need a solicitor for a property settlement involving an inheritance in Springfield or Ipswich QLD?
Legal advice is not required, but the Federal Circuit and Family Court of Australia recommends obtaining independent legal advice about the effect of any proposed settlement. A solicitor can assist with disclosure, negotiation, consent orders and the property transfer steps.
Can a financial agreement protect an inheritance from a property settlement in Queensland?
A binding financial agreement under the Family Law Act can address how an inheritance will be treated if the relationship breaks down, according to Legal Aid New South Wales. Each party must receive independent legal advice from an Australian lawyer before the agreement is signed.
Your Next Steps
How an inheritance sits within a property settlement depends on the full picture of a relationship, not a single rule or formula. For clients in Ipswich and across Greater Springfield, understanding that picture early, including the time limits that apply, means decisions can be made with a clear view of the options rather than under pressure.
If property settlement after separation is on your mind, the next step is a straightforward one. Get in touch with the Brookwater Legal team or call (07) 3437 8555, and we'll talk you through how the process generally works.
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External Resources
- Federal Circuit and Family Court of Australia - Financial or property overview
- Federal Circuit and Family Court of Australia - Financial or property: We cannot agree
- Legal Aid Queensland - Dividing your property fairly
- Legal Aid Queensland - Property and financial agreements
- Family Law Act 1975 - Federal Register of Legislation
Brookwater Legal · This article contains general information only and does not constitute legal advice. It does not take into account your individual circumstances. You should obtain legal advice about your own situation before acting on anything in this article. Liability limited by a scheme approved under Professional Standards Legislation.
