One of the most common questions people ask before entering a Binding Financial Agreement in a family law context is this:
Can it protect money I haven’t even received yet?
Specifically, can a BFA cover future inheritances?
The short answer is yes. A properly drafted Binding Financial Agreement can address future inheritances and set out how they will be treated if the relationship ends under the family law framework.
But like most things in family law, the detail matters.
Let’s unpack how future inheritances are treated under Australian family law and how a BFA can be structured to protect them.
How The Court Normally Treats Inheritances
If there is no Binding Financial Agreement in place and a couple separates, the court determines property division using a structured process.
The court considers:
- The total asset pool
- Contributions of each party
- Future needs
- Whether the outcome is just and equitable
Inheritances are not automatically excluded from the asset pool.
If an inheritance is received during the relationship, it may form part of the divisible property.
Even if it is received after separation but before final orders, it can still be relevant.
The timing, use and integration of the inheritance matter.
What About Future Inheritances?
Future inheritances that have not yet been received are generally considered a financial resource rather than current property.
However, they may still influence the court’s assessment of future needs.
For example:
- If one party is expected to receive a substantial inheritance
- If that inheritance is reasonably certain
- If it materially affects financial security
The court may take it into account.
This creates uncertainty.
And uncertainty is exactly what many people want to avoid.
How A BFA Can Address Future Inheritances
A Binding Financial Agreement can specify how future inheritances will be treated.
It can:
- Exclude future inheritances from the divisible property pool
- Confirm that any inheritance received remains separate property
- Address how income generated from inherited assets will be treated
- Define whether inherited funds used for joint purposes alter ownership
Clear drafting allows couples to define the rules in advance.
This reduces ambiguity later.
Why Clarity Matters
Without clear wording, disputes often arise around questions such as:
- Was the inheritance kept separate or mixed with joint funds?
- Was it used to renovate the family home?
- Was it placed in a joint account?
- Did both parties rely on it?
When inherited funds are blended with joint finances, tracing becomes complicated.
A well drafted BFA can anticipate these issues.
A Practical Example
Consider this scenario.
A woman expects to inherit a rural property from her parents in the future. She enters into a Binding Financial Agreement before marriage stating that any inheritance she receives will remain her sole property and not form part of the asset pool.
Years later, she receives the inheritance.
If the BFA is valid and properly drafted, the inherited property is protected according to the agreement.
Now contrast that with a situation where no agreement exists.
She receives the inheritance and uses part of it to renovate the matrimonial home held in joint names.
If separation occurs, the court may treat the inheritance as part of the divisible pool or consider it heavily in contributions.
The difference lies in planning.
The Risk Of Mixing Assets
Even with a BFA, behaviour after receiving an inheritance matters.
For example:
- Placing inherited funds into a joint account
- Using inheritance to pay off a jointly owned mortgage
- Transferring inherited property into joint names
These actions can complicate asset classification.
A BFA should clearly address how such situations are handled.
Precision reduces risk.
Inheritances In Second Marriages
Future inheritance protection is particularly common in second marriages.
Where one party has children from a prior relationship, preserving inherited wealth for those children is often a priority.
A BFA can:
- Ring fence inherited property
- Define succession expectations
- Reduce intergenerational conflict
This is not about wealth alone. It is about family planning.
Can A BFA Protect Against All Claims?
A Binding Financial Agreement can significantly reduce exposure, but it must:
- Comply strictly with legal requirements
- Include full financial disclosure
- Be entered into voluntarily
- Be properly drafted
If the agreement is invalid, protection fails.
Additionally, if circumstances change in ways relating to children that cause hardship, the court may intervene in limited situations.
Absolute immunity does not exist.
Strong drafting provides strong protection.
The Importance Of Future Proofing
Future inheritance clauses should address:
- Inheritances not yet received
- Inheritances received during the relationship
- Income generated from inherited assets
- Inheritances received after separation but before finalisation
Comprehensive drafting avoids ambiguity.
Generic clauses often fall short.
Future Trends In Inheritance Protection
As property values rise and intergenerational wealth transfer increases, protection of inherited assets is becoming more common across income brackets.
Expect:
- Greater use of tailored inheritance clauses
- Increased scrutiny of financial disclosure
- More structured asset segregation strategies
- Heightened awareness in blended families
Inheritance planning is no longer niche.
Common Misunderstandings
People often assume:
- Inheritances are automatically protected
- Future inheritances cannot be addressed
- Once inherited, funds are always separate
- The court ignores inheritance
- A simple clause is enough
These assumptions create vulnerability.
Clarity and compliance are essential.
Frequently Asked Questions
Can A BFA Protect An Inheritance I Haven’t Received Yet?
Yes.
A properly drafted agreement can specify how future inheritances will be treated if received.
The key is clear wording and legal compliance.
What If I Use Inherited Money For Joint Expenses?
That can complicate matters.
Mixing inherited funds with joint assets may blur ownership lines.
A well drafted BFA should address these scenarios.
Does The Court Always Include Inheritances In Property Division?
Not automatically.
Timing, integration and contributions matter.
However, inheritances are not automatically excluded either.
Are Future Inheritances Considered A Financial Resource?
They can be, particularly if reasonably certain.
This may influence future needs assessments.
A BFA provides greater predictability.
Do Both Parties Need Legal Advice For The BFA To Cover Inheritances?
Yes.
Independent legal advice is mandatory for the agreement to be binding.
Without it, protection may fail.
Planning Today Protects Tomorrow
Yes, a Binding Financial Agreement can cover future inheritances.
For many families, this is less about wealth and more about certainty, succession planning and reducing future conflict.
If you are considering a Binding Financial Agreement and want to ensure future inheritances are properly protected, visit Ignify Legal to obtain structured advice tailored to your financial circumstances.
Please call us today at (02) 8319 1032 or submit an online enquiry.
