Will I get the value of my inheritance back? What if I am about to receive an inheritance? These are common questions family lawyers receive from clients who come to them when their marriage or de facto relationship breaks down.
Often one or the other party will have received a sizeable inheritance during the relationship. It may have been received towards the commencement of the relationship and used to purchase the family home. Likewise, the inheritance may have been received in the middle or at the end of the relationship. Some clients are concerned about whether any future inheritances may be taken into account in the property settlement with their ex-spouse.
An inheritance is not a protected category of asset. The Full Court of the Family Court in Bonnici v Bonnici (1992) FLC 92 2272 stated that an inheritance is definitely not shielded from family law property settlements. That means that an inheritance may be included in the pool of matrimonial property to be divided between each party.
The way in which an inheritance is treated on the breakdown of a relationship will depend on the circumstances of the individual case.
One of the considerations of the Court as to how to treat the inheritance which was espoused in Bonnici is the timing with which the inheritance was received. In that regard, the Court espoused “the other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has been terminated except in very unusual circumstances”.
In certain circumstances, it may be appropriate to include an inheritance in the pool of marital property to be divided between the parties. In this case, the inheritance and the overall weight it is to be given will be considered a contribution by the party who received the inheritance.
The timing of an inheritance may also influence the percentage distribution of the pool of marital property and how the Court deals with it. It may be more difficult to argue that an inheritance received very early in a relationship should be treated as a separate asset rather than one that has been received very late in the relationship or post separation.
Overall the case law in relation to this issue evidences that there is no fixed rule concerning how inheritances are treated. Judges have wide discretion, however it is reasonable to say that a starting point is that an inheritance is more likely to be included in the pool of assets for division between the parties.
