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Contrary to popular belief, in most cases an inheritance will be considered a joint asset and part of the property pool when a couple separates or divorces.
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Most people seem to think that an inheritance belongs to them and is not considered to be a joint asset when it comes to a property settlement in a divorce or separation. However, the family court is required to consider inheritances in proceedings and generally speaking does not exclude them from the property pool when ruling on a property settlement.
In determining how the inheritance will be split, the family court will consider a variety of different factors, including:
The timing of the inheritance
In most cases, if the inheritance was received at the start or during the relationship it will form part of the property pool. However, if an inheritance is received late in the relationship or after separation the court may exercise its discretion and in some cases exclude it.
Each person’s contribution to the property pool
In any property settlement, the court will look at each person’s contribution to the property pool throughout the relationship. Naturally, the value of the inheritance will have a direct impact on that person’s contribution.
The court uses each person’s contribution to determine a final split of assets (eg 50/50 or 30/70 etc). In determining the final split of assets, the amount each person contributes is a consideration along with other factors like future earning capacity, health issues, parenting obligations and the overall size of the property pool.
Case in point Roverati & Roverati [2021] FamCAFC 89 (11 June 2021)
During their 33 year marriage both the husband and the wife received inheritances. The husband’s inheritance was over $400,000 and the wife’s was $50,000.
Over the course of the marriage the wife had contributed more money, had a longer history of paid employment and had made significant contributions as a homemaker and parent.
In reaching a decision on the couple’s property settlement, the court determined that approximately 30% of their total assets were derived directly from the husband’s $400,000 inheritance.
However, in determining the split of assets it ruled that the husband receive 55% and the wife receive 45% – in recognition of her other contributions over the course of the marriage.
Need advice on splitting assets?
If you and your partner are separating and need advice on your property settlement, the team at Lakey Family Law are here to help. We have extensive experience in all aspects of divorce, property settlements and parenting arrangements and can assist – simply contact us for an initial, obligation free chat.
