Inheritance often raises concerns during separation or divorce, particularly in family law. Clients frequently ask if an inheritance they received, or expect to receive, will be included in the asset pool for division with their spouse. This article explores the treatment of inheritance in family law, focusing on the keyword “inheritance family law.”
Inheritance
Family law handles inheritance differently based on factors like timing, asset pool size, and each party’s contributions during the marriage. The case of In the Marriage of Bonnici [1991] FamCA 86 provides crucial insights into how courts address property division involving inheritance in family law.
Case Overview: In the Marriage of Bonnici
In the Bonnici case, the husband received an inheritance of approximately $430,000 during a 17-year marriage. The total value of the marital assets, including the inheritance, was $585,000. Initially, the trial judge divided the assets equally, awarding the wife the matrimonial home and ordering her to pay the husband $18,000. Despite the husband’s inheritance, the judge acknowledged the wife’s significant financial and caregiving contributions during the marriage. The Full Court later clarified how inheritance should be treated in family law cases.
Family Law
The Full Court in Bonnici highlighted that the treatment of inheritance depends on each case’s circumstances. Key points from the judgment include:
- Inheritance Timing: If the inheritance is the sole significant asset and the other spouse made substantial contributions, the court may award a portion of the inheritance to that spouse.
- No Automatic Protection: Inheritance isn’t automatically protected. If other assets are sufficient, the court may treat the inheritance as the inheriting party’s entitlement.
- Contribution to Inheritance: Generally, a spouse can’t claim a significant contribution to an inheritance received late in the relationship or after it ended, unless exceptional circumstances exist, such as caregiving for the testator.
Practical Implications for Property Division
The impact of inheritance on property division in family law cases depends on several factors, particularly timing:
- Early Marriage Inheritance: Courts typically view early marriage inheritance as a contribution by the inheriting spouse. However, as time passes, this contribution’s significance may diminish, especially if the inheritance integrates into the family’s finances.
- Late Marriage or Post-Separation Inheritance: Courts are less likely to include late or post-separation inheritances in the asset pool. Instead, they focus on the contributions made during the marriage.
- Prospective Inheritances: When a party expects an inheritance but hasn’t received it, courts generally exclude it from the asset pool. Wills can change anytime. However, courts may consider prospective inheritances when assessing future needs, particularly if one party has a significant future financial need.
Tulloch v White: Considering Prospective Inheritances
The case of Tulloch v White offers further insight into how courts may handle prospective inheritances in family law. The court noted that if a testator has already made a will favorable to one party and there is evidence of impending death, this prospective inheritance may influence property division. The court emphasized that ignoring such an inheritance would be unreasonable, especially if it relates to the financial needs of one party.
Key Considerations in Inheritance Family Law
When addressing inheritance in family law, several key considerations arise:
- Timing of the Inheritance: The timing of inheritance receipt can significantly influence property division. Courts generally treat inheritances received late in the marriage or post-separation differently than those received earlier.
- Value of the Marital Asset Pool: The overall value of the marital asset pool, including inherited and jointly acquired assets, plays a crucial role in asset division. Courts strive for just and equitable distribution, considering all relevant factors.
- Financial and Non-Financial Contributions: Courts assess the fairness of asset division based on each party’s contributions, both financial and non-financial. These include earnings, caregiving, and other contributions that affect the division’s equity.
- Usage of the Inheritance: Courts consider how the inheritance was used during the marriage. If it was integrated into the family’s finances or used for joint purposes, courts may treat it differently than if it remained separate.
Conclusion: Navigating Inheritance in Family Law
Inheritance can complicate property division in family law. Each case is unique. Courts carefully evaluate the timing, value, and use of the inheritance, alongside each party’s contributions, to reach a just and equitable outcome. Understanding these factors is vital for anyone dealing with inheritance in family law.
