When parents are passing on their wealth to the next generation, they are often concerned that it may be claimed by their child’s spouse in a family law dispute. By Binay Prasad, Senior Associate and Accredited Specialist (Wills & Estates).

How does the Family Court treat inheritance?

Generally speaking, when a married couple separates, all of the assets of the relationship (including an inheritance) will form part of an ‘asset pool’. The Family Court has powers to divide this asset pool between the separating couple. The same laws equally apply to de facto couples (subject to certain requirements).

However, your child’s spouse will not automatically receive part or all of your child’s inheritance in a family law claim. The Family Court will assess a range of factors when deciding whether the spouse should have access to the inheritance. These factors include the length of the marriage, the contributions (both financial and non-financial) made by each party to the marriage, the size of the other assets of the marriage, the circumstances of any minor children, and the future needs of each party.

How can I prevent a Family Law claim against my child's inheritance?

There are steps that you or your child can take to make it more difficult for your child’s spouse to make a family law claim against an inheritance.

Binding Financial Agreement

Your child and their spouse can enter into a Binding Financial Agreement ("BFA"), either during their marriage or after separation. This agreement will set out how assets (including an inheritance) are to be divided between the couple, in the event of separation. Provided the BFA is properly drafted and executed in accordance with the Family Law Act, this can be an effective method to protect an inheritance. However, a BFA can be set aside in certain circumstances, particularly if there has been a material change in circumstances since the BFA was executed (eg, the birth of a child). Furthermore, a BFA will obviously require the co-operation of your child’s spouse.

Testamentary Trust Will

You can execute a Will which incorporates ‘testamentary trusts’. In summary, this will mean that upon your death, rather than your assets passing into your child’s direct name, the assets will pass into a trust, for the benefit of your child. The trust will be controlled by a trustee, and the trust will typically have a range of beneficiaries including your child, their children and other family members. The trustee would then allocate income and capital to the beneficiaries of the trust, at the trustee’s discretion. Testamentary trusts can be drafted with a varying degree of flexibility, depending on your and your child’s circumstances. For example:

More flexible: The trust can be optional (at your child’s discretion), and can appoint your child as the trustee. This will give your child the most flexibility and control over their inheritance, and will allow your child to distribute income and capital to the beneficiaries of the trust (including themselves) at their discretion. A flexible testamentary trust can provide significant tax planning benefits for your child. However, as discussed below, a flexible trust could be more vulnerable to a family law claim.
Less flexible: The trust could be mandatory, and/or could be controlled by an independent trustee (eg another family member, or aprofessional trustee). As your child would have little or no control over the inheritance in the trust, it would be less likely that the Family Court would regard the inheritance as your child’s asset for family law purposes. This could make it more difficult for your child’s spouse to claim the inheritance in a family law claim. The disadvantage of a less flexible trust is that your child will have little or no control over their inheritance, and there may be less tax planning benefits.

Generally speaking, the less control a child has over their trust, the less likely their spouse will be able to claim the trust assets in a family law dispute. However, even if the Family Court finds that the inheritance in the trust is not an asset available for division, the Court can still regard the inheritance as a ‘financial resource’ of your child. The Court may then award your child’s spouse a greater share of the non-inheritance assets of the relationship, to ensure that the spouse is adequately provided for.

How can Sharrock Pitman Legal help me?

The Family Court has far reaching powers when dividing property (including an inheritance) between separating spouses. Expert legal advice is essential in order to reduce or eliminate the risk of a successful family law claim against an inheritance.

At Sharrock Pitman Legal, we have an Accredited Specialist in Wills and Estates Law. Call our Wills and Estates team on 1300 205 506 today if you require assistance.

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The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.‍

Written by a member of our Legal Team

Binay Prasad

For further information contact

Binay Prasad

Binay is a Senior Associate of Sharrock Pitman Legal.

He is an Accredited Specialist in Wills and Estates law, having been accredited by the Law Institute of Victoria. He is part of our Wills and Estates group and deals with Wills and Estates planning and Probate. For further information, contact Binay on his direct line (03) 8561 3329.

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When parents are passing on their wealth to the next generation, they are often concerned that it may be claimed by their child’s spouse in a family law dispute. By Binay Prasad, Senior Associate and Accredited Specialist (Wills & Estates).

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

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(03) 8561 3318

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How can I protect my child’s inheritance from a family law claim?

When parents are passing on their wealth to the next generation, they are often concerned that it may be claimed by their child’s spouse in a family law dispute. By Binay Prasad, Senior Associate and Accredited Specialist (Wills & Estates).

How does the Family Court treat inheritance?