Understanding Spousal Inheritance Rights in NSW

There is no fixed amount that a person must leave their spouse.

In most cases, each spouse has an obligation to provide adequate provision for their surviving spouse. If they fail to provide adequate provision, the surviving spouse can apply to the Supreme Court of NSW for a family provision order, which, if successful, will increase their inheritance.

If the court makes orders increasing the inheritance, the inheritance is usually received in the form of more property (i.e. family home or equivalent), a larger pecuniary legacy, or maintenance payments. The size of the inheritance received will depend on many factors, including the size and nature of the deceased estate, the length of the relationship, and the financial resources of the surviving spouse, among other factors.

What Happens if a Spouse is Left Out of the Will?

A spouse who believes they have received an inadequate inheritance may apply to the Supreme Court of NSW for provision or further provision from the estate of their deceased spouse, regardless of whether they are a named beneficiary in the will.

In NSW, an application is made under section 59 of the Succession Act 2006 (NSW). When determining whether to make provision (i.e., to change the terms of the will in favour of the surviving spouse), the court may consider the 16 factors listed in section 60(2) of the Succession Act 2006 (NSW) which include the size and nature of the estate, the surviving spouse’s financial resources, and the length of the relationship, among other factors.

Inheritance Entitlements for Married vs De Facto Spouses

The court has the same power to change the terms of a will to provide adequate provision for a spouse as it does to provide adequate provision for a “de facto spouse.”

However, a married couple will usually be treated as having a stronger commitment to one another for inheritance purposes compared to a de facto couple and generally give rise to a greater responsibility to provide provision due to the solemnity of the marriage and the promises and covenants that flow from the marriage.

How the Succession Act 2006 (NSW) Impacts Spousal Inheritance

In NSW, the Succession Act 2006 (NSW) impacts spousal inheritance as it grants the court discretionary power to change a person’s will after they die to ensure adequate provision is made for the surviving spouse or de facto spouse.

Can a Spouse Contest a Will in NSW?

Yes, a spouse is an eligible person and can contest a will. If they believe they have not received adequate provision, they are able to make a claim against the deceased estate.

The prospects of success of an application can only be determined after a consideration of the relevant 16 factors in section 60(2) of the Succession Act 2006 (NSW) which the court may have regard to when determining a claim.

One of these factors is the financial resources of the surviving spouse. If the surviving spouse is wealthy in their own right, this would likely reduce the prospects of success. Conversely, if there is a prenuptial agreement, binding financial agreement, or family law settlement agreement, then this may limit the prospects of any claim.

While the intentions of the benefactor or wishes of the benefactor are relevant, they are by no means conclusive, and other factors may weigh in favour of the court making further provision.

Divorce and Its Impact on Spousal Inheritance Rights in NSW

In most cases, divorce will sever the obligation to leave your former spouse an inheritance, particularly if there has been a divorce settlement in Australia or a property settlement agreement within which the marital asset pool has been divided fairly.

In some cases, however, a former spouse may still be able to secure further provision from the estate if they did not receive adequate provision from the estate and there are circumstances warranting the making of the family provision claim application; in other words, circumstances that make the former spouse someone whom the deceased spouse had a moral obligation to provide adequate provision.

How is an Inheritance dealt with in Divorce

We often get asked, “Is my spouse entitled to my inheritance?”

This aspect relates to how an inheritance received by one spouse during their lifetime (i.e. from a parent) is treated at the end of a relationship or marriage or separation or divorce.

In most cases, the person who receives the inheritance wants the inheritance included in the asset pool and wants the inheritance to benefit the entire family. If the gift is received before a relationship, it may be treated as an initial contribution or financial contribution to the relationship by that person in the event of a separation. The financial contribution by the spouse would be included in the property settlement agreement, but the court will treat the inheritance as an asset of the person who brought the inheritance into the relationship and may result in them receiving a greater share of the property pool for division in the event of a divorce and final property settlement.

In other cases, the person who receives the inheritance may want it kept separate from other assets and the marital asset pool to ensure it does not pass to the other spouse. This is more common in blended families where the inheriting spouse wants to ensure the inheritance flows to their biological children. This can be done by executing an agreement that treats the inheritance as separate property from the rest of the marital asset pool upon divorce. The agreements can be entered before or after they have received the inheritance.

However, these agreements are not always enforceable as intended. In some cases, the longer the relationship continues after the inheritance is received, the more likely to be considered part of the joint asset pool, and conversely, if the inheritance is received late in the relationship, it is less likely the inheritance will be treated as part of the marital property. However, late inheritance may be included in the asset pool depending on the circumstances. Therefore, the timing of the inheritance matters, and the length of the relationship can be relevant to whether the inheritance will be treated as part of the overall property pool. The way in which a family court will consider an inheritance and how much a spouse receives will depend on a range of factors.

Contact Our Wills and Estate Lawyers For legal Advice on Wills and Estates Law

If you have recently lost a spouse and need further provision or have received an inheritance during your relationship and would like to keep your inheritance, want to protect your inheritance, or talk to a solicitor about inheritance and divorce and inheritance in the property settlement process, contact Empower Wills and Estate Lawyers in Sydney, NSW now on 1300 414 844 to speak with a member of our team of experts.

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Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.