Speaking with The Australian, Suzanne Jones, Head of Estate Planning at Coote Family Lawyers, discusses how financial agreements can protect potential inheritances and avoid them being an issue during divorce. 

As the largest-ever intergenerational wealth transfer unfolds, family lawyers are sounding the alarm about a costly misconception: many assume their inheritance is automatically protected from divorce settlements.

Prenups and mid-nups 

Suzanne Jones, head of estate planning at Coote Family Lawyers, said more people were entering financial agreements during marriage to protect potential inheritances and avoid them becoming an issue at separation.

Agreements could quarantine any inheritances if couples separated, she said.

“I find that some clients even include clauses in a will in anticipation of receiving an inheritance that carves the inherited assets away from their other assets,” Ms Jones said.

“Our firm is definitely seeing more attention paid to inheritances when drafting wills.”

Tools that lawyers used to help avoid litigation over inheritances included testamentary trusts, mutual will agreements and binding financial agreements (BFAs), Ms Jones said.

“Even if an inheritance is not included as part of the assets to be divided, it is likely to be considered a financial resource available to the beneficiary, which could impact on the overall division of assets to be determined by the court.”

Future Inheritances 

Ms Jones said while future inheritances could affect maintenance orders, they were generally safe from ex-spouses after divorce proceedings.

“It would generally be hard for a spouse to make a claim for any inheritance received by the other party post-divorce and following the parties having completed their property settlement, although there are limited cases where this may be possible,” she said.

You can read the full article in The Australian here: How to protect your inheritance from being lost in a divorce

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