How to Protect Inheritances in Divorce and Separation 

You’ve just inherited your beloved grandmother’s beach shack or a tidy sum from a generous uncle—congratulations (and condolences). But before you go splurging on a new ute or planning that escape to Byron Bay, there’s a critical question to ask:

What happens to your inheritance if your relationship hits a rough patch—or worse, a full-blown split?

If you think “it’s mine, no matter what,” think again. In Australia, the Family Court sees things a little differently. And if you’re not prepared, your ex could end up with a chunk of what your family intended for you.

Working with experienced Geelong-based family lawyers is essential—they’ll help protect your inheritance, even if love doesn’t last forever.

• Inheritances can be included in property settlements depending on how they were used.
• Australian courts prioritise fairness, not just legal ownership.
• Keeping your inheritance separate and well-documented is vital.
• Binding Financial Agreements (BFAs) are your legal safety net.
• Getting legal advice early can save you money and headaches later.

There’s a common myth that inheritances are untouchable during divorce. Sorry to burst your bubble, but courts can and do include inheritance in the asset pool—especially if it’s been used for joint benefit.

For example:

• Did you inherit money early in the relationship and use it to buy a shared home? That’s fair game.
• If you tucked it away in a personal account and never dipped into it for shared expenses? It might be treated as separate.

Ultimately, it’s less about the source and more about the intent and usage. Romantic? Not quite. Realistic? Absolutely.

Even if you received it in your name, your inheritance could become part of the pool if:

• It was used to pay joint debts or fund home renovations
• It was spent on shared lifestyle upgrades (e.g. holidays, vehicles)
• It significantly contributed to the couple’s financial position
• One partner is financially disadvantaged after the separation

“In family law, it’s not about who brought what—it’s about what’s fair.”

So, if you assumed that the cottage left to you by Grandpa was safe, you might want to rethink the paperwork.

Nobody wants to end up arguing over Nan’s vase or the inheritance cheque. Here’s how to reduce the risk:

1. Keep it Separate
   Park the funds in your own bank account. Mixing it with joint finances is like mixing red and white—good luck separating it later.
2. Avoid Using It for Shared Expenses
   That kitchen renovation may look great, but it weakens your case that the money was solely yours.
3. Document Everything
   Leave a paper trail—statutory declarations or notes in your will can help clarify your intentions.
4. Consider a Binding Financial Agreement (BFA)
   Also known as a prenup or postnup, a prenup is a legally binding way to define what’s yours (and what’s not) if things fall apart.
5. Update Your Will
   A changed relationship status calls for a refreshed estate plan. Don’t leave it to guesswork or Google.

Courts don’t have a vendetta against inheritances, but they do have a responsibility to ensure things are fair. Factors they consider include:

• Timing – Was the inheritance received early or late in the relationship?
• Usage – Was it spent on shared assets or kept apart?
• Value – Does the inheritance significantly affect the total asset pool?
• Contributions – Both financial (income) and non-financial (e.g. homemaking)
• Future Needs – Is one party more vulnerable post-separation?

Each case is unique, so don’t bank on a “one-size-fits-all” ruling.