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Inheritances in Family Law

As discussed in previous articles, when assessing the division of an asset pool in a family law property settlement matter, there are 5 steps which the Court considers. A summary of those 5 steps are:

1. It must be just and equitable to make an adjustment of property.
2. What is the asset pool?
3. What are the contributions of the parties?
4. What are the future needs of the parties?
5. It must be just and equitable to make an adjustment of property.

Step 3 of the above 5 step process relates to the contributions of the parties. Contributions are both financial and non-financial contributions of the parties. The contribution this article will address is that of any inheritances received by either party.

When considering the weight to place on an inheritance received by a party the Court will take into account the timing of the inheritance, the contribution made to the inheritance by the party not receiving the inheritance and how the inheritance was utilised by the parties.

This article will address the timing of the inheritance, more specifically when a party receives an inheritance post separation. This inheritance will not automatically be ‘excluded’ from or ‘immune’ from consideration in applications for property adjustment.

A Court can adopt a ‘global’ approach and all assets and liabilities are considered, including the inheritance which was received post separation or the Court can adopt a ‘two pool’ approach whereby it separates the inheritance received post separation from the rest of the asset pool.

If a ‘global’ approach is adopted, the Court will consider all assets and liabilities as a whole and assess the contributions by the parties to the pool as a whole.

If a ‘two pool’ approach is adopted the Court will assess the contributions of the parties to the inheritance during the course of their entire relationship. It will also assess contributions made separately across the entire relationship in respect of the balance of the parties’ interest in property, including superannuation.

If you require any further legal advice in relation to inheritances during property settlement or any other matter relating to the breakdown of a relationship please telephone our office on 4324 7699 to make an appointment with one of our family law experts.