Have you or your former partner received an inheritance acquired after separation?

Have you or your former partner received an inheritance acquired after separation?

Should a significant inheritance received by one party long after separation be included in the property pool for division between the parties? In Calvin & McTier [2017] FamCAFC 125 the Full Court of the Family Court of Western Australia was required to consider this issue.

In that case, the parties were married for approximately 8 years, during which time they had one child together. Following separation, the child spent equal time with the parties.

At the commencement of the relationship the wife had nominal assets. Conversely, the husband owned two real properties, a motor vehicle, shares, superannuation entitlements and personal effects.

During the relationship, the parties sold the husband’s two properties and purchased two further properties from the sale proceeds. They otherwise contributed to the best of their respective abilities.

At the time of the trial, the net value of the parties’ assets was found to be $909,633. However, following separation, but prior to trial, the husband received a substantial inheritance from his late father. Of that inheritance, $430,686 remained at trial.

There was dispute between the parties as to how the husband’s post-separation inheritance should be treated. The wife sought to include the inheritance in the parties’ property interests available for division. The husband submitted that the inheritance ought to be excluded from the parties’ property interests.

The trial judge made orders dividing all of the property of the parties, including the inheritance, so that the husband was to receive 65 per cent of the property and the wife 35 percent. The husband appealed on the basis that there was a lack of connection between the inheritance and the parties’ matrimonial relationship.

Appeal

The main issue on appeal was whether the trial Judge made an error erred by including the husband’s post-separation inheritance within the parties’ net property pool available for division.

The Full Court noted that, under the Family Law Act 1975 (Cth) the Court has power to make an order dividing property acquired post-separation. The Court therefore turned to the issue of whether  the trial judge made an error in the exercise of his discretion by including the inheritance in the parties’ property interests.

The Full Court held that  an inheritance is not a protected category and will not automatically, if at all, be treated differently from other assets available for distribution between the parties. The Full Court held that it was open for the trial judge to include the inheritance amongst the property to be divided.

The Appeal was therefore dismissed by the Full Court and the husband was ordered to pay the wife’s reasonable costs.

These sorts of cases serve as a timely reminder that it is in the best interests of separated parties to finalise their property settlement as soon as possible post-separation.

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