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What You Need to Know About Post-Separation Inheritance

Post-Separation Inheritance and your Property Division

One of the greatest areas of difficulty for people going through a divorce is how family law treats post-separation inheritances.  In a nut-shell, where you and your ex have separated, all and any assets, including inheritances, gifts, windfalls (irrespective of when they were acquired -start, during or after the relationship ended) will be considered.

Having said that, the Court has the discretion to decide whether it will include pre or post separation acquired assets, as part of your asset pool.

The case of Calvin and McTier[2017]FamCAFC 125 involves a situation where the Judge, included the Husband’s inheritance in the pool. This was a case where the Husband and Wife were married in 2002, they separated in 2010 and a year later in 2011 they were divorced. Three years after their divorce in 2014 the Husband inherited $430,000 from his late father.

The $430,000 was included in the asset pool which in total comprised of approximately $1,340,000.  The inheritance made up 32% of the party’s asset pool.

The trial Judge applied his discretion and decided that a fair and equitable outcome was that the Husband receive 65% and the Wife receive 35%. Unhappy with this decision, the Husband appealed.

Sadly, for him, he lost. The Full Court of Appeal said:

“… 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. The trial magistrate was not obliged to follow one course or the other …

Interestingly, a similar case which followed was Holland and Holland [2017] FamCAFC 166. In that case, the Husband and Wife were together for 17 years. They separated in 2007. In 2011 (4 years) after separation, the Husband inherited $715,000 from his late brother.

In this case, the trial judge excluded the inherited property, and treated it as a financial resource.

The wife appealed. This time she was successful.

The Full Court said that the Judge incorrectly identified the inheritance as a financial resource, where she should have treated it as property of the Husband, after all he was the legal owner of this property.

The Full Court made it very clear that property acquired after separation does not have to have a connection or direct link to the marriage. It can be included in the property pool regardless.

In this case the Wife’s appealed was allowed and sent back to the Family Court before another Judge to be heard again.

The two take home messages from these cases are:

  1. If you are going through a divorce and you have property to divide, settle promptly. So many things can happen in life, so it’s best once the decision has been made to end your relationship to attend as quickly as possible to resolve your property matters. Seriously being stuck in limbo and uncertainty for years is not healthy or fun for anyone.

 

  1. Settle, settle, settle. The Court has very broad discretion. It’s impossible to say with certainty what the outcome will be when a Judge is given the power to make the final determination.

 

As you can see from the cases above, similar circumstances but very different results.

 

Take control of your life and your money matters. Settle, even if it sometimes means cutting your losses, at least you can move on and create a new life with certainty and ease.

 

The information contained here is not intended as legal advice. It is of general information only and should not be relied upon in any specific matter. Should you require specialist family law advice, we are available to assist you. Contact us on 8999 1800.

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