Are you inheriting a windfall, or just a headache?
Dealing with an inheritance during a marriage or relationship breakdown can be tricky. Can it be counted as part of the property pool? What if there is more than one and and one substantial, while the other is quite small?
And if you receive an inheritance after splitting up, can it still be counted in the property settlement?
The truth is, each case is unique and over time the courts have differed over the appropriate way to deal with inheritances in these situations.
In a recent case (Roverarti and Roverarti) the couple had been married for 33 years and had each received an inheritance during the course of the relationship.
The husband’s inheritance was a house valued at more than $400,000 and he derived income from the inherited property over the years, which was reinvested or used for household expenses.
The wife’s inheritance was valued at $50,000 and any income from her inheritance went to the children, or the children or her siblings.
The court found the husband’s inheritance was used for the benefit of the entire household, so the property settlement was split 55/45 in the husband’s favour.
It can often be a point of contention between parties in a family law dispute as to how inheritances should be treated, particularly when they are received post-separation.
In another case (Shnell and Frey) the husband and wife were aged 68 and 62 respectively, and their marriage had lasted for 35 years.
The husband received in inheritance of $530,000 quite late in the relationship, while the wife received an inheritance of more than $2.5 million four years after they had separated.
The wife said the inheritance should be part of a separate property pool, with her to receive the entirety of her inheritance in addition to a division of the other assets.
However, the judge said it was appropriate for the wife’s inheritance to be included in the property pool, as it was considered to be a “significant contribution”, and the judge also found that a substantial amount of the husband’s inheritance had been used to improve the family home.
It’s a good idea to have specific evidence, not just of the amount of an inheritance and the timing of when it is received, but also to have details about how that inheritance has benefited anyone involved in the relationship. Those benefits could relate to providing extra income for the welfare of the family and/or could result in buying more property, making the inheritance a springboard for future wealth.
On the other hand, a small inheritance, spent on luxury items, pursuits or lifestyle, may provide little ongoing benefit to someone in a long relationship.
If you’re dealing with a property settlement and, division of assets, and you have questions about inheritances or other aspects of family law, make an appointment with Michael Lynch Family Lawyers today. Our family law experts are here to help you. Phone: (07) 3221 4300 or email: [email protected]
