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What's Mine Is Not (Necessarily) Yours
Married people and people who have been in a de facto relationship for three years or more face a difficult decision when they come to inherit property: should the inheritance be shared with their spouse or kept separate?
The law certainly does not require someone to share their inheritance with their spouse and, while some people may find it hard to imagine not doing so, others may wish to keep the money for themselves but worry about what their spouse would think if they did so.
Legally, spouses can keep their inheritance as their separate property. Under the Property (Relationships) Act, property acquired by way of inheritance is separate property, but for it to remain separate, it must be kept separate. An inheritance will become a relationship property if it is used for the benefit of both spouses or if it becomes so intermingled with other relationship property that it loses its character as separate property.
It is common for someone who inherits money to apply the money towards payment or part payment of the couple's joint mortgage over their family home. The family home is relationship property though, and in the event that the couple separate, the equal sharing provisions of the Act apply, with the result that the person who did not inherit the money receives a windfall of half the inheritance. If that inherited money had been kept separate though, the equal sharing provisions of the Act would not apply and the person who received the inheritance would be able to retain it in the event of separation. There are various ways of keeping an inheritance as separate property. For example:
Sometimes a combination of a family trust and a contracting out agreement is necessary. September 2009 |
Contact
Cathy Fisher |