The Court has a wide discretion about how they deal with inheritances received during a relationship as well as after separation when making property settlement orders. Inheritances are not a protected category of property and will not automatically be treated differently from other assets available for distribution.
In the 2017 case of Calvin v McTier the parties were married in February 2002, they separated in April 2010 and were divorced in August 2011. The relationship was therefore of approximately 8 years duration. The parties had one child together who was born in 2005.
In January 2014 the Husband received an inheritance from his late father’s estate and the inheritance constituted approximately 32% of the net asset pool.
In January 2015 the Wife issued an Application for property settlement. She also applied for leave of the Court to proceed with her Application out of time because the time limit to make her Application had passed. The Court granted her leave to bring the Application out of time in March 2015.
The Court assessed the parties’ contributions during the relationship as being equal however the Husband’s post-separation contributions were assessed to be substantially higher than those of the Wife because of the inheritance that he had received from his late father’s estate.
The Court ordered that the Husband was entitled to 75% of the net asset pool (inclusive of the inheritance) based on contributions. The Court then made an adjustment in favour of the Wife in the amount of 10% because of the disparity in the parties’ income earning capacities as the Husband earned significantly more than the Wife.
The Husband lodged an appeal to the Full Court of the Family Court, arguing that there was an insufficient nexus between the marriage and the inheritance which he received nearly four years after the parties had separated.
The Full Court dismissed the appeal and held that:
- It had the power to include the inheritance in the asset pool even if it was acquired a significant period of time after separation.
- The High Court decision of Stanford (in which the Court held it may not always be just and equitable to alter ownership of property of parties to a relationship) did not require property acquired post separation to be dealt with any differently to property acquired during a relationship nor did it require the Court to have a specific reason to interfere with any particular asset of the parties (namely the inheritance).
- There was no requirement for there to be a nexus between any specific asset owned by one of the parties and the marriage.
If you would like to discuss how an inheritance received by you or a partner is likely to be treated in a property settlement, please do not hesitate to contact one of our experience family lawyers on (03) 8393 0144.