How Inheritances are Treated in Family Law Cases

The breakdown of a married or de facto relationship is a difficult and emotional time for all parties concerned which can unfortunately lead to highly contested litigation in the Family Court system in regard to the division of property and financial resources and the ongoing maintenance of parties to the relationship.

The treatment of inheritances in Family Law disputes (either received by a party during the course of the relationship, post separation or yet to be received) often compounds the very nature of such disputes. This can be due to the significant amount of the inheritance concerned but often due to the emotional significance attached to any inheritance received by a party from their deceased parent, grandparent etc.

If an inheritance has been received, the party who received the inheritance often believes that they should retain all of it in accordance with the wishes of the deceased. On the other hand, the other party concerned may claim that any such inheritance received is an asset of both parties and that they are also entitled to a share of it.

Even if an inheritance has not yet been received by a party, often the other party will demand to see a copy of the will of their former partner’s remaining parent or grandparent so as to claim that the former partner will receive significant funds from the Estate, which needs to be factored into the division of the assets owned by the parties.

The approach adopted by the Courts when determining how to deal with inheritances depends on a number of factors including but not limited to:

  1. The timing of the inheritance (i.e. was the inheritance received prior to the commencement of the relationship, during the relationship or after the parties were separated? Has the inheritance actually been received?)
  2. Did the party who did not receive the inheritance make any contribution towards the inheritance at all?
  3. The amount of the inheritance.

After considering such factors, the Court will determine whether an inheritance is to be treated as a contribution on behalf of one or both parties of the relationship or if the inheritance should be excluded from the pool of assets altogether – with an adjustment being made in favour of the other party who is not receiving any portion of the inheritance.

Generally, if an inheritance is received in the early or middle stages of a long relationship, it will be included in the pool of assets to be divided between the parties and will treated as a contribution by the party who received the inheritance. If an inheritance is received post separation, it is possible that it will be excluded from the pool of assets to be distributed between the parties and an adjustment made in favour of the party who does not receive the inheritance. If an inheritance is yet to be received, it will not be included in the pool of assets to be divided between the parties however (and depending upon how soon the inheritance is likely to be received), it may be a factor that is considered by the Court when assessing the parties’ respective future needs.

At Carew Counsel, our team of Family Lawyers and Estate Planning Lawyers have the experience and knowledge to provide you with both expert advice in regard to the above Family Law issues and can also assist you with your own Estate Planning.

Reviewed Date: 23 Sep 2016

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