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Inheritance inclusive after separation?

In family law disputes, it is a common misconception that an inheritance or other large sum received after separation will be excluded from the property pool to be divided between parties.  This issue was dealt with in the recent case of Calvin v McTier [2017] FamCAFC 125 where the husband had acquired a substantial inheritance from his father’s estate four years after the parties had separated.

The parties were in a relationship for eight years with the marriage ending in 2011. In 2014, the husband received a large inheritance worth over $430,000. The inheritance made up 32% of the value of the parties’ assets at the time of the trial. The husband had also contributed a significant amount at the beginning of the relationship in addition to the inheritance.

After weighing up the contributions of the parties, the trial magistrate found that the inheritance should be included in the asset pool to be split between the parties. The magistrate found the overall contribution to be 75:25 in favour of the husband. Then he made a 10% adjustment in favour of the wife due to the difference between the parties’ earning capacity under s75(2) of the Family Law Act.  Therefore, it was decided that the wife would receive 35% of the property pool – inheritance inclusive. If the inheritance were to be eliminated from the pool, the wife’s share represented 52% of the other assets between the parties.

The husband appealed the decision of the magistrate. He based the appeal on the main premise that there was an inadequate connection between the husband’s inheritance and the parties’ marriage and as such, the inheritance should not have been included for division between them. The Full Court stated at [51]-[53]:

“…the court retains a discretion as to how to approach the treatment of after-acquired property. The trial magistrate could have included the inheritance amongst the property to be divided or dealt with it separately… it was not submitted that any error said to have arisen from the inclusion of the inheritance for division led to a result which … was inappropriate.”

The husband’s appeal was dismissed and he was ordered to pay the wife’s costs.

The case demonstrates that the Family Court will take into account various “windfalls” in property proceedings, such as lottery wins, shares and redundancies. The case also shows that the Court will most likely take these assets into account at the time of the hearing, as opposed to the date of separation. The Court will also account for contributions made throughout the relationship, which may have assisted in the acquisition of various assets as well as contributions made to the household.

It is essential to seek legal advice to protect your assets if you or your partner have received, or may receive, an inheritance or other windfall.

By Nicholes Family Lawyers

 

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