Loading...

Inheritance in property settlements

12 July 2023

In a marriage or a de facto relationship it is not uncommon for one of the spouses to receive an inheritance. If the parties separate, the question often arises as to how the inheritance should be dealt with in the couple’s property settlement.

There is also the situation where a parent may have a provision in a Will for their child (the spouse) to receive a large inheritance. This raises the question of whether a prospective inheritance should be considered when deciding a property settlement. If it is included, what is the outcome?

The extent to which an actual inheritance or a prospective inheritance will impact on a property settlement will depend on the individual case. However, previous cases do provide guidance on what can happen.

Inheritance received during the relationship

When an inheritance is received by a spouse which benefits both spouses of the relationship, often the spouse who is the recipient will argue in the property division that the financial benefit was only intended for them and not the other party.

The starting point, is to determine whether the payment was intended to benefit both of the spouses or, only the child of the parent. This situation arose (in the context of a gift) in the case of Kessey, in which the wife’s mother had contributed large amounts of money to improve the matrimonial home. The court determined that the contribution by a parent of a spouse to the property of the marriage will be considered as a contribution on behalf of that spouse, unless there is evidence which indicates this was not the parent’s intention. The alternative situation would be that the parent intended for both spouses to benefit, not solely the child of the parent.

Can a prospective inheritance be taken into account?

If the parent of a spouse has a provision for an entitlement in their Will – but they are not deceased, then the provision cannot form part of the “property pool” for division. However, the “entitlement” is relevant in determining what the percentage apportionment of the existing “property” will be.

The determination of each spouses “percentage entitlement” involves a careful consideration of all of their respective “contributions”, as well as their “future needs”. It is in the context of “future needs” that any “prospective inheritance” becomes relevant.

In a situation where a spouse’s parent has made a Will leaving an inheritance to the spouse and they no longer have the testamentary capacity to change their Will, the court has stated that (in such a situation) where the spouse’s parent is leaving a significant estate, it would be “shutting one’s eyes” not to give real consideration to this in the property proceedings, by way of a percentage adjustment.

The consideration and treatment of a “prospective inheritance” has been considered in several cases – here are some showing how the position has changed:

  • White and Tulloch v White: in this case the wife’s mother was a widow and aged 81. She was in good health and had two children, one of which was the wife. The husband filed a subpoena which required the wife’s mother to produce her Will but not documents detailing her financial situation. The court identified that the “future needs” consideration in determining any percentage adjustment will depend on the particular facts of each individual case. The court found that, although it seemed likely that the wife’s mother would benefit one, or both, of her children, she had no moral obligation to do so and could choose other persons to benefit. Therefore, the Full Court held that the prospective inheritance was not a financial resource (and was not considered as a “future need” factor) and would not be factored into the property settlement percentages.
  • Milankovthe husband’s father had testamentary capacity. He had set up a Trust with property worth $2.8million. Although the husband’s father was 72 years old and had three other children, this “prospective inheritance” of $2.8million was taken into account in the property settlement between the husband and his former wife. The husband tried to appeal this decision, however the appeal was dismissed. Therefore, the Full Court agreed with the decision that the wife receive a 40% adjustment increase to her portion of the $800,000 matrimonial pool, as a result of the possibility that the husband would receive $2.8million upon his father’s death. It should be noted here that the husband’s father still had testamentary capacity which meant he could change his Will at any time until his death, yet the court still factored this into the property division.

Other Situations

The person leaving an inheritance does not need to be a spouse’s parent for the court to take it into consideration in a property settlement. In one case, the husband’s new wife had a terminal illness and was likely to die within the next two years. The husband was living in the wife’s home and it was likely he would continue to do so after the wife passed away. The court found that by the husband having a home to live in indefinitely was a valuable “financial resource” and a percentage adjustment was made in the former wife’s favour.

Summary 

If an inheritance has already been received, this amount will be included in the “property pool” and seen as a percentage contribution by that spouse. In situations where a party is likely to receive a “prospective inheritance” the court will not make a percentage adjustment for property settlement in all situations, it will depend on the case. The court has pointed out that a clear connection must exist and the monetary value of the estate needs to be of such significance that it would have an impact on the parties’ financial situation. It must also be more than “mere likely” that the party will receive that inheritance.

It is important that everyone gets Family Law advice on their own specific circumstances. To speak with one of our experienced family lawyers, call (07) 3221 4300 to arrange a no-obligation fixed fee appointment, or fill in our online form here.

2023-07-12T21:47:45+10:00

Client Testimonials

Thank you Debra for all the work you did for me, you both made the process manageable and brought sense to the chaos.

R.B., Toowong
I was impressed by my solicitor’s attention to detail and her concern for me, and that the process was explained to me and that I understood it at all times.
B.W., Chapel Hill

My lawyer was the most knowledgeable of all lawyers I spoke to when looking for a lawyer. Michael Lynch Family Lawyers showed professionalism.

R.R., Brighton
So pleased to have had a good, sound and knowledgeable firm.
C.W., Brookfield
My lawyer acted with professionalism in all her dealings with me and with the lawyer on the other side. I was always kept in the loop. I liked her approach. Thanks.
D.S., Coorparoo

Many thanks to Stephanie for her help and support through this time, I was incredibly impressed with her work.

L.K., North Lakes
May I take this opportunity to express my gratitude to you and your staff for the excellent professional services I received. In a word, priceless.
D.H., Hendra
My solicitor provided a personalised service, prompt and quick responses and cost information prior to my commitment.
G.C., Southport
I always felt that the service provided by Michael Lynch Family Lawyers was of a high standard. Each time, after appointments I came away feeling secure. Keep doing what you are and maintain the ‘family feel’ that permeates your services.
C.W., Brookfield
I like that my lawyer treated me like a friend and kept jargon to a minimum. She was easy to contact and kept me informed.
L.R., Samford
The staff at Michael Lynch Family Lawyers were great. Everyone was fantastic, professional, understanding, caring and always communicated with me. I knew I was in good hands.
A.A., Eatons Hill
Amy, thank you. You have been diligent, accurate and pro-active for the entire duration of my matter. I appreciate it.
R.P., Cleveland
Michael, thank you again for your presence here yesterday. We really appreciated the clarity and accessibility of your presentation. It is a rare thing to find somebody who not only has expertise, but also has a skill in communicating it.
J.S., Brisbane
My family lawyer was very helpful in assisting me to combat a very ugly situation without stooping to the low levels that the other solicitor attempted to take us.
M.J., Manly
I like your friendly service and the ability to speak to my solicitor directly.
R.G., Wishart

I have appreciated the way that you and the staff at your firm have handled my situation. I would especially like to mention the professional and caring way my lawyer conducted my case, I am deeply grateful and extremely happy with the results. I will be referring others to your service.

J.H., Wellington Point
If I need a family lawyer in the future I’ll be heading to Michael Lynch Family Lawyers again.
C.W., Brookfield
I appreciate my lawyer’s professional approach and her being on top of my situation.
N.S., Mt Gravatt

Thank you for helping me through this difficult time. You have been caring, compassionate and efficient. Some of my divorcing friends have not been so fortunate. In my mind, you are the best family lawyer in Brisbane. If anyone I know needs a good family lawyer, I will tell them to speak to you. Thanks again.

B.T., Clayfield
I was guided through a really difficult time with expertise of Michael Lynch Family Lawyers. I am more than happy with the outcome of mediation.
J.H., Windaroo

We had such a positive experience with Michael Lynch Family Lawyers, and we highly recommend their services. Meticulous attention to detail, attended quickly to every additional request we made, and made sure we always knew exactly where we were every step of the way. Our lawyer took what was such a stressful and emotional time for our family, and made the process feel so smooth and seamless.

N.B., Brisbane
Your newsletters are great, I appreciate them.
K.B., Carina
Michael Lynch Family Lawyers have really listened to me. I felt confident my case was handled well. The law has changed recently, and I did not feel that a previous law practice I spoke to was suitably up-to-date.
P.B., Carindale

I would like to thank your firm for the support and compassion shown while dealing with my matter.

C.M., Brisbane
Amy, thanks very much to you and your team. Throughout my dealings with MLFL I have been continually impressed with your level of professionalism and, in particular, your understanding of circumstances and the articulate way you conduct yourself. I was completely satisfied with today’s outcome and without your experience and expertise in family law I doubt that the result would have been achieved.
M.R., West End
Amy, thank you for all that you have done during this matter. You impressed me with your professionalism from our initial meeting, and you have proven beyond doubt, to have had the skills and knowledge required. You are a credit to the company, and I would highly recommend you to anyone in a similar situation.
R.P., Cleveland
Thank you for the outstanding legal advice you have provided and professionalism in which you conduct yourself. I am truly thankful that it was you who represented me.
M.T., Stafford
Your team is professional, warm, friendly and real.
N.R., Crows Nest
Many thanks for your assistance – life is now great – I’m moving on.
J.K., Mansfield

I was always confident that I was getting the very best advice.

T.S., Flinders
Amy’s work was extremely professional but above all she has a manner and wisdom in dealing with people under stress. I will be recommending your firm to anyone that requires assistance.
K.H., Augustine Heights

At Michael Lynch Family Lawyers I got professional and ‘no-nonsense’ advice, costs were within quoted amounts and my matter was resolved quickly – well done!

L.R., Ascot

Thank you very much to everyone at Michael Lynch Family Lawyers. Thank you for helping me get my life back and make a fresh start. To have that fresh start without fear and anxiety is priceless.

A.A., Perth
Your team’s communication with me was exceptional, I knew exactly what was happening.
A.A., Eatons Hill
I liked my solicitor keeping things as simple as possible.
S.M., Clayfield

Thank you, you kept me sane in a difficult situation and gave me the encouragement and the confidence to keep going. You made me feel extremely comfortable.

A.M., Chambers Flat

I really liked the personable service by Michael Lynch Family Lawyers, the simple plain language you adopt and everyone’s patience.

A.O., Kedron
I really appreciated the happiness of your secretarial staff.
G.C., Clayfield

I just wanted to get in touch to say thanks for helping me get through my custody and settlement. Thanks again to you and your staff. You have had a significant positive impact in my kids’ lives!

B.S., Brisbane

My lawyer has been an amazing help through this stressful time. I will remember her help for the rest of my life. Thank you.

J.H., Brisbane

I was very impressed with the initial interview. Everything was well-explained, and the advice was honest about what I should expect.

C.M., Morningside

I’m very glad ‘Michael Lynch Family Lawyers’ is my lawyer and not the other side’s solicitor.

S.S., Hamilton
A personalised and professional service. Information has been clear and provided timely to assist my decision-making.
S.S., Hamilton
The professionalism and reliability delivered by Amy Honan was fantastic. I had an urgent matter around my property sale and Amy offered to provide assistance over a weekend if I required it – that’s above and beyond!
E.F., Nundah

Your staff is knowledgeable, professional and very calm.

A.C., Helensvale

Michael Lynch Family Lawyers know what they are talking about.

R.M., Warwick
Thank you for your ongoing conciliatory approach in this matter and as always I appreciate your level headed advice. I certainly feel that I ended up with the right Solicitor.
S.C., Nundah
Thank you, you placed my needs first, you were aware of the need to reach a final result and not get caught up in the personal issues of the other party.
S.L., Moranbah
Michael Lynch Family Lawyers always gave me competent and knowledgeable advice. I was consistently kept up to date. The meetings and phone calls were kept business-like, yet caring and thoughtful of my emotional state at the time. Thank you.
J.S., Holland Park
Thank you for providing me with a professional yet empathetic approach to gain the best outcome for me. My solicitor was excellent in explaining the processes and in representing me in Court. You have great customer service!
T.V., Everton Park

My solicitor is a good listener. My documentation maintained the high moral ground.

S.S., Hamilton
I appreciate you being upfront with fee estimates. You also have a fantastic website and the seminars REALLY helped to get me focussed.
T.C., Tarragindi
Lovely to deal with and provides a balanced view in what are very difficult circumstances.
A.C., Morningside

Thank you for being very personable, professional and always providing me with the most appropriate advice in my times of difficulty. The other party’s lawyers were extremely aggressive, while Michael Lynch Family Lawyers remained calm and professional.

S.D., Parkinson

After utilising the mediation services team recommended by your organisation, my ex-partner and I were able to reach some interim agreements about parenting. I am incredibly grateful for the advice provided by Debra Effeney; and found your firm’s services to be exceptionally professional. If we needed to consult a family lawyer in the future, we would have no hesitation in reconnecting with your firm.

K.M., Paddington
Michael is very personable and very good at covering the material and explaining the strategy.
J.O., Hawthorne

Michael Lynch Family Lawyers are easy to deal with, and your systems are good.

D.T., Ferny Grove

You, guys, provide extraordinary service.

A.O., North Brisbane
Thank you for the great newsletter. Your article on “Coping with Christmas” is brilliant – clear, caring and helpful. Thanks again!
C.T., Bribie Island