!

NOTICE ALERT IN LIGHT OF COVID-19

WHAT WE PROPOSE AND HOW WE CAN ASSIST

At Watson & Watson our clients come first. Please be assured of our continued dedicated services to all current and new clients.

As we have done in the past, we will continue to offer alternative conferencing methods ie video conferencing, skype or telephone conferences. Reviewing of all documentation provided to us prior to any initial conference will be all inclusive of our set fee. Do not hesitate to contact Shereen Da Gloria on (02) 9221 6011 should you have any concerns.

Protecting Your Inheritance – How Does the Family Court Take into Account an Inheritance Received in Circumstances Where the Parties Have Separated and One Party Receives an Inheritance?

30/11/2020

An issue that arises regularly in Family Law Property matters is how the receipt of an inheritance received by one party to a marriage will be treated in a property settlement.  An inheritance may be an actual inheritance because there has been a death and money has actually been received.  There could be a prospect or expectation of an inheritance, a chance of receiving an asset in the future.  Should an asset not yet received but anticipated be taken into account?  This will be in the case where a Will has been drawn up which makes a gift to a beneficiary. 

The approach of the Family Court or Federal Circuit Court in deciding how to divide property is generally to take into account all assets and all liabilities.

Case Law

Bonnici and Bonnici – General Principle

In this case, the Full Court held that an inheritance was part of the property pool to be divided.  The Court said that if there are sufficient funds in the property pool to reach a just and equitable settlement, then an inheritance received late in a relationship should not be included.  A late received inheritance would be treated as an entitlement of the party who received the inheritance. The Court held that the inheritance moneys received by the husband were not to be taken into account as the Wife made no contribution to the receipt of those moneys.

Gilmartin v Gilmartin 2016 – Inheritance Received Late in the Relationship

In this case the Full Family Court of Australia considered how to deal with an inheritance received by the husband.  There had been a 25 year relationship but the pool of property available for division at the time of separation was not substantial.  The wife argued in Court that the husband’s inheritance from his mother’s estate should be included in the pool of property for division between the parties.  This argument was important because the other available assets were not significant or substantial.  The Wife would receive more if the inheritance was included in the pool. 

The Courts view was that:

“Except in very unusual circumstances, a party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated.”

What are unusual circumstances?

The wife argued that the unusual circumstances were:

  • The absence of any other significant asset owned by the parties.
  • The wife’s contribution as primary homemaker and caregiver during the course of the marriage.
  • The proceeds of sale of the former matrimonial home owned by the husband and wife were used partially, to repay a debt incurred by the husband’s side of the family and this provided assistance to the husband’s mother.
  • The wife has been named a beneficiary in an earlier Will

In this case, the Court accepted the wife’s arguments and divided the husband’s inheritance between the husband and the wife.

Each individual case may be different and the timing of the receipt of the inheritance may be the critical issue. 

Inheritances received early in the relationship or marriage will generally be accepted by the Court to be a contribution by the person receiving the inheritance to the acquisition, maintenance and improvement of property. 

Financial/property settlement can sometimes be difficult to navigate if the asset pool includes an inheritance or a potential inheritance.  If you are unsure as to what you rights and entitlements are when it comes to inheritances, please do not hesitate to contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your matter and seek timely advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011

Related Cases & Articles

Personal Experienced Professional Affordable

Phone 02 9221 6011

Send us your enquiry
Book an appointment Request a quote Send your question
Online enquiry form

Watson & Watson are always available to provide expert legal advice and answer any questions you may have.

All enquiries received will be responded to within 24 hours.

Call: 02 9221 6011