Inheritances in Family Law

A common question often asked by clients in their family law settlements is: how are inheritances received or likely to be received treated by the Family Court? Are such inheritances part of the asset pool to be divided between them and their spouse?

In short, the impact of an actual inheritance depends on the individual circumstances of the case and whether it was received early in the marriage, late in the marriage, or post-separation.

An inheritance received during the course of a relationship is presumed to be a contribution on behalf of the person inheriting. However, the earlier on in the relationship the inheritance is received the less likely there will be an adjustment in that beneficiary’s favour. [1]

In the case of Bonnici, the husband received an inheritance late in the marriage of approximately $430,000.00 and the value of the other total assets was in the amount of $585,000.000 over the course of their twenty one (21) year relationship. [2] The Full Court said:

42. The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband’s inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.

43. A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.

44. The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property. But there was no evidence of this in the present case. [3]

If a parent has made a provision in their will for a spouse to receive an entitlement but they have not deceased yet, the impact of such would depend on the individual circumstances of the case, but in short it cannot form part of the property pool for division as the spouse’s parent could change their Will at any time.

However the Court may view that the prospective inheritance is a consideration for the future needs of one party and in the case of Tulloch v White the Court said the following:

“…in a case where the tes­ta­tor had already made a Will favourable to the par­ty but no longer had tes­ta­men­tary capac­i­ty and there was evi­dence of his or her like­ly impend­ing death in cir­cum­stances where there may be a sig­nif­i­cant estate, and where there was a con­nec­tion to s 75(2) fac­tors, it would be shut­ting one’s eyes to treat that as irrel­e­vant” [4]

Put simply, if one party to a relationship can establish that they were connected in some way to the receipt of the inheritance, or require additional financial aid due to future issues related to illness or care for children then the Court might consider making an adjustment from the inheritance for this purpose.

If you are concerned about the implication of an inheritance in a family law matter, please contact our Family Lawyers.

[1] Kessey and Kessey (1994) FLC 92 – 495.

[2] In the marriage of Bonnici [1991] FamCA 86.

[3] Ibid.