A common question asked of a separation lawyer is whether inheritance is included in a family property settlement. The Full Court of the Family Court in Bonnici & Bonnici held that property does not fall into a “protected category” merely because it is an inheritance.
How the Court determines whether an inheritance can form part of a family property settlement depends on when the assets were inherited and the impact of the inheritance on the available property pool.
Impact on Asset Pool
In the case of Bonnici & Bonnici, the Full Court of the Family Court held that if there are ample funds already in the property pool for a settlement, the inheritance would normally be treated as the entitlement of the receiving party. However, if the inheritance is the only asset of the relationship and one party performs a more substantial homemaker role to their financial detriment, it is open to the court to include inheritance in the property settlement.
Timing
The Court will only include inheritance that is received late in the relationship or after separation in the property pool if your separation lawyer can demonstrate “very unusual circumstances”.
In Gilmartin & Gilmartin [2016] FCCA 3135, the Court held the husband’s inheritance from his late mother’s estate should be included in the pool of assets for division of the parties. In reaching the decision that the circumstances were “very unusual”, the Court factored in the following:
- The wife was the primary homemaker and caretaker
- The proceeds of sale of the former matrimonial home were used to partially repay a debt incurred by the husband’s family
- The wife had very little input into the financial decisions made by the husband and his family
- The wife was named a beneficiary in the 2012 will of the husband’s late mother
Splitting Inheritance that Forms part of the Property Pool
After including the inheritance in the property pool, your separation lawyer will need to persuade the Court that it is just and equitable to adjust the parties existing property interests. In doing so, the Court will consider the financial and non-financial contributions of the parties prior to, during and post separation. The Court will also examine the future needs of the parties as listed in the Family Law Act s 75(2).
For advice about how an inheritance may impact your family property settlement contact one of our divorce lawyers on 1800 300 170 or email us at famlaw@matthewsfolbigg.com.au
Disclaimer
Family law situations can be complex and sometimes they can involve serious issues. Information outlined is proposed to provide general guidance only. Due to the seriousness of legal matters as well as the uniqueness of your individual situation, professional advice should be sought. For advice, please contact one of our Family Lawyers.
