Can an ex-spouse make a claim against an inheritance of the other spouse if it is received late in the marriage or after separation?
A very difficult and tense topic that often arises when parties to a marriage or a to a de facto relationship seek legal advice with regards to property division is how the Family Court of Australia treats inheritances even those which are received after separation.
It is natural to think that because an inheritance is received after separation that it has no connection to the parties’ relationship that it should be excluded for the rest of the parties’ assets which are sought to be divided.
The response that is usually provided by Family Lawyers when asked if an ex-partner can make a claim on the other party’s inheritance in a property settlement is that, firstly, the Court has to consider all of the parties’ assets irrespective of when they were acquired. This includes assets which were acquired before the relationship, during the relationship as well as those after separation.
Secondly, it is not so much a question of making a claim on the inheritance on its own but rather after having considered all of the assets and the parties’ contributions (both financial and non-financial) the Court has the discretion to do one of the following two (2) things when determining how the overall property of the parties should be divided:
- treat certain assets received after separation differently in the above determination; or
- include assets acquired after separation in the overall asset pool available for division between the parties.
The issue of inheritances received after separation was recently revisited by the Full Court of the Family Court of Australia. In the case of Calvin v McTier  FamCAFC 125 (12 July 2017) the Husband and the Wife were married for 8 years. There was one child of the relationship. Four years after separation, the Husband received an inheritance of $430,000 from his late Father. At the time of the trial, the inheritance represented about 32% of the total assets of the parties which had an overall value of $1,340,000.
Despite the Husband’s argument that the inheritance should have been excluded from the asset pool for division as it did not have a “connection” to the parties’ matrimonial relationship, the Court held that the inheritance be included in the overall asset pool available for division between the parties.
The Court assessed that the Husband made the overwhelming financial contributions after separation because of the inheritance. His overall contributions were assessed as being 75% and the Wife’s as being 25%. In addition the Court made an adjustment of 10% in favour of the Wife to reflect the disparity of the parties’ income earning capacities. The Husband ultimately received 65% of the overall assets and the Wife received the remaining 35%.
In another recent case of Holland & Holland  FamCAFC 166 (9 August 2017) it involved a 17 year marriage with two teenage children. The parties had separated in July 2007 and were divorced in January 2012. Three and half years after separation, the Husband received an inheritance from his late brother worth about $715,000. The Court “excluded” the inheritance from the asset pool and treated it as a “financial resource”. A financial resource usually arises when a person does not have actual legal control over an asset but he or she has a reasonable expectation of receiving a financial benefit from it.
Upon appeal, the Full Court of the Family Court of Australia held that it is wrong as a matter of principle to “exclude” an asset from being considered altogether in the overall property division. However the Court stated that in certain cases it may be appropriate to treat certain assets separately where the parties’ interests to such assets differ or if the parties have made different contributions to them. That means, if assets have been received after separation, the Court has the discretion to place them in a separate pool from the rest of the assets of the marriage and the Court will need to assess the parties’ contributions to both asset pools spanning over the period of the parties’ relationship as well as during the post-separation period.
Why are these cases significant?
The above cases demonstrate that all of the parties’ assets need to be identified before the Court can make orders for property settlement. The second important message from these cases is that there is no consistent approach as to how the Court treats assets received after separation but rather the Court retains a very wide discretion as to the approach it will ultimately take.
Therefore it is important that you seek targeted advice from an experienced family law solicitor and that you also provide all relevant information in relation to any inheritances that you or your ex-spouse is about to or has received to your solicitor to ensure that you receive a realistic assessment of your potential property entitlements as soon as possible.
If you would like to discuss your property settlement matter, please contact Anthi Balafas of Rockliff Snelgrove Lawyers on (02) 9299 4912.
Author: Anthi Balafas
Disclaimer: this information is not intended to constitute legal advice. it is general information only and should not be relied upon in specialist family law advice.