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Should gifts and inheritances be treated as a special form of separate property

When a person receives property as a gift or as an inheritance, it will be that person’s separate property. He or she does not need to share it when a relationship ends.

However, the law treats this form of property differently to other separate property.

Normally, separate property becomes relationship property if it is used to buy assets in the partners’ joint names. But that does not apply if the separate property is a gift or inheritance. The following examples show the difference.

Bridget and Jo
Bridget has saved some money before she met Jo. Bridget and Jo decide to buy some land in the country to start a vineyard together. Bridget uses her savings as a deposit. Bridget and Jo are the property’s co-owners. The whole value of the land, including Bridget’s deposit, is relationship property.

Alex and Morgan
Alex inherits some money after her grandmother dies. Alex and Morgan are married. They decide to buy some land in the country to start an orchard. Alex uses her inheritance money as a deposit. Alex and Morgan are the property’s co-owners. The value of land reflecting Alex’s inheritance will remain Alex’s separate property. The balance of the land’s value will be relationship property.

The only way a gift or inheritance can become relationship property is if:

  1. the property has been mixed with other property so it is impossible to tell which property is which; or
  2. it is used by the family – for example, the family home or household furniture.

We are looking at whether the law should treat all separate property in the same way. We want to know whether property a partner receives as a gift or inheritance deserves special treatment.

What do you think?

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