Inheritance
A common concern raised by clients is whether their former spouse may be entitled to their inheritance.
Generally, the short answer is, family law property settlements include all assets, liabilities and superannuation acquired by the parties at first instance, irrespective of whether the asset is owned by one or both parties and whether the asset was acquired before, during or after separation.
The Court’s approach to inheritances in family law matters depends on the following factors:
- The time the inheritance was received (ie before, during or after the marriage/ de facto relationship).
- The intentions of the benefactor. If for example the benefactor made their intention clear that the inheritance was for the family as a whole, it is likely to be included in the asset pool.
- The size of the overall asset pool as compared to the size of the inheritance. If for example the asset pool is less than the inheritance itself, the Court may include the inheritance in the asset pool for division.
Roverati & Roverati [2021] FamCAFC 89
In the recent case of Roverati & Roverati [2021] FamCAFC 89, the Court addressed the most appropriate method to examine the parties’ inheritances. The Husband and Wife were married for 33 years. The asset pool was approximately $1.3 million.
During the parties’ relationship, the Husband inherited approximately $404,000 and the Wife inherited approximately $50,000.
The Wife used her inheritance for the benefit of the parties’ children, whereas the Husband’s inheritance was applied towards the household expenses or reinvested.
The Judge at first instance ultimately made orders dividing the parties’ assets on a 50/50 basis on the grounds that the parties’ marriage was of a long duration and that their contributions made over the course of the marriage were equal.
The Husband challenged the primary Judge’s treatment of the parties’ inheritances. Significantly, the Full Court found that the primary Judge failed to recognise the significance of the Husband’s inheritance (which compromised at least 30% of the asset pool) and the use of the Husband’s inheritance, which was for the benefit of the household.
The Full Court re-exercised the discretion of the primary Judge and made an adjustment of 55% to the Husband and 45% to the Wife.
Lessons learned
This case illustrates the importance of recognising the amount of a parties’ inheritance and also the purpose with which the inheritance is applied.
Summary
The treatment of inheritance during a family law property settlement depends on the individual circumstances of each case. We understand the complexities and sensitivities of inheritance issues arising in family law property settlements.
Please telephone one of our experienced family lawyers on (03) 8393 0144 if you have any queries regarding the treatment of inheritance or property settlement matters in general.