Is an inheritance part of the property settlement?
The timing of an inheritance – when it was received – during a relationship is key to deciding if that inheritance is going to be part of a property settlement.
If you or your spouse receive an inheritance before your relationship started, or around the time it started, it’s generally considered to be an initial financial contribution to that relationship. And that means, it’s unlikely to be separated from the overall property pool in the event of a divorce.
If however, one of you receives an inheritance during your marriage, how that money is used will depend on whether it counts as part of the property pool. If the funds were used to improve the family home, take family holidays, or to pay for family expenses, the remaining amount will be considered a financial contribution by the person who received the inheritance.
What about a possible future inheritance?
If one spouse is expecting an inheritance in the future, but their parent or the person they’re expecting the money from, is not yet deceased, that provision does not form part of the property pool.
However, it can be taken into account determining what percentage of the property pool goes to each person.
The division of the property pool involves a consideration of each person’s contribution to the relationship, as well as their future needs. And if one spouse is set to inherit a significant amount of money or property, the court can take that into account.
In previous cases, the court has said there must be a clear connection between the person giving and receiving the inheritance, and the monetary value needs to be so significant that it would impact on the spouse’s financial situation. It also must be more than “merely likely” that the person will actually receive that inheritance.
In one case, Calvin & McTier (2017), the Court decided to include a significant inheritance received by the husband after separation in the assets available for division.
The Court found that although both the spouses’ contributions during the relationship were equal, the husband’s post-separation contributions were significantly greater than the wife’s as he had received the inheritance and had equal care for their child.
The Court decided that the husband was entitled to 75% of the net pool of assets and resources, including the inheritance, and made an adjustment of 10% to the wife to reflect the disparity in income and earning capacity between them.
This resulted in an overall split of the assets of 65% to the husband and 35% to the wife.
The Court stopped short of confirming that an inheritance acquired after separation should always be included, but “the Court retains a discretion as to how to approach the treatment of after-acquired property”.
If you have any questions or concerns about separation, divorce, the division of a property pool, or anything else related to family law, the experts at Michael Lynch Family Lawyers are here to help you.
Make an appointment to see one our solicitors today by calling our office on: (07) 3221 4300 or email: [email protected]
