Do I get to keep my inheritance in a Family Law Property Settlement?

30 October 2014

It is important to remember that every Family Law Property Settlement case is different and will be decided in accordance with the guiding principles in the Family Law Act and the case law arising from past decisions of the Family Law Courts.  This article summarises some of those guiding principles.

Was the inheritance received a gift to both parties, or just one?

This is the first question to be answered.  If the will specifies that the bequest was to both spouses, then it would usually be considered to form part of the pool of matrimonial assets available for division.  However, it is uncommon for bequests to be expressed in this form.  Usually, the bequest is just to one party, being the son or daughter.  If the bequest is just to one party, then a court would usually consider the inheritance to be counted as a contribution on behalf of the person named as a beneficiary in the will.  However, this contention could be rebutted by evidence that the intention was that the inheritance was for the benefit of both spouses rather than only the child of the will-maker.  For example, if the will-maker in his/her years before death had been cared for by both his/her child and the child’s spouse in their home and there is evidence that the bequest was in recognition of this.

If the inheritance was for just one of the parties, should the inheritance received be quarantined?

There is no clear answer to this question.  Some Family Law Court Judges have decided yes and some have decided no.  Again, it will depend on the particular circumstances.  For example in a 2014 Family Court of Australia case, the Judge decided that a $1.3m inheritance received 10 years prior to separation should not be quarantined and, also, it should not be considered as an extraordinary contribution in the circumstances.  In that case, the parties were married for 40 years and had assets totalling $44m. The Judge decided to divide the property equally.

If the marriage is of shorter duration, and if the inheritance is received towards the end of the marriage, or even subsequent to separation, some Judges have decided to quarantine the inheritance whilst others have decided to include it in the pool of assets available for division and count it as an extraordinary contribution made by, or on behalf of, the spouse receiving it- thus giving that spouse a greater share of the asset pool which he/she would have otherwise received.

Every case is different and you should consult an experienced Family Law Property Settlement Specialist lawyer for the best advice.

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