inheritance and divorce settlement

Inheritance and Divorce: Claims over a spouse’s inheritance

Whether your inheritance will be counted in the divorce assets to be split depends on each case. There is no “one rule for all cases”. Where the inheritance has already been received these are some relevant factors taken into account in a divorce case:

  • Time since the inheritance – If a long time has passed between the inheritance and the separation, the asset is more likely to be treated as part of the family assets.
  • The intentions of the deceased – If the deceased had specific intentions for how the beneficiary should use the inheritance, then this may be relevant to how to how it is divided. For example, they may have intended the inheritance to benefit the whole family, not just the named beneficiary.
  • Who helped care for the deceased – If the spouse of the beneficiary also helped to care for the deceased, for example if the deceased lived with them, then it’s more likely that the assets will be treated as belonging to the family.

What if I divorce before my spouse gets his/her inheritance?

The law says that it is not “property” when it has not come into the hands of the spouse. In other words it has not yet materialised and there is not a guarantee anyway they will get it because the testator may change their will or live for another 40 years.

However in some cases in the Family Law Courts it can be argued that judgement on how to split the assets should be made only in part and otherwise postponed for the “expected additional asset or financial resource”. Such cases are rare.

Expectation of  inheritance

If one party has an expectation of a significant inheritance, the other party may argue that this should be relevant in proceedings under the Family Law Act 1975. However, the issue is far from clear and a great deal would depend on the individual facts. The grounds on which an expectation of an inheritance could be relevant would be:

(a) Section 79(2) of the Family Law Act requires the court to only make an order if “it is satisfied that, in all the circumstances, it is just and equitable to make the order”.

(b) Section 79(5) enables the court to adjourn section 79 proceedings provided the requirements of the section are met if “there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them”: s 79(5)(a).

(c) Section 75(2)(b) requires the court to consider the “financial resources of each of the parties”.

(d) Section 75(2)(o) requires the court to consider “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.

What the Family Law Courts Judges say about expected inheritance

The case of White and Tulloch v White (1995) the Court rejected the argument that a prospective inheritance was a financial resource however stated:

It is ultimately a question of fact and degree…… In a case where the testator had already made a will favourable to the party but no longer had testamentary capacity and there was evidence of his or her likely impending death in circumstances where there may be a significant estate, and where there was a connection to s 75(2) factors, it would be shutting one’s eyes to realities to treat that as irrelevant.

On the other hand, the bald assertion that one of the parties has an elderly relative who has property and is or is likely to benefit that party is so speculative that it would be inappropriate to contemplate it as relevant in a s 79 determination, it being too remote to affect the justice and equity of the case in any worthwhile way. 

To be sure what your position is it would be prudent to seek the advice of an Accredited Family Law Specialist.

If you would like to know more about this topic -take advantage of our free half hour legal consults. They can be done in person or via Skype or telephone conference. 

Call 03 8742 3199 or email info@rigolilawyers.com.au to make a booking and mentioning this article to claim your free booking.