It is a reality during the course of any given relationship that
you may receive an inheritance. If you do, it is important to note
how an inheritance may be treated in the event of a relationship
One of the misconceptions that I often find is that people
believe that their inheritance will be excluded from the asset
pool. Generally speaking, it's not - if your inheritance is
received during the relationship, a Court will probably include it
in the asset pool, available for division between the parties.
It does, however, make a difference to the overall property
adjustment. Although it will be treated as part of the asset pool,
it will count as a contribution from the person whose relative has
Let's say, for example, that five years prior to separation
you receive an inheritance of $500,000. Thanks to the inheritance,
your asset pool is $1,000,000, and the Court will conclude that you
brought (indirectly) $500,000 into the asset pool and have
contributed far more to the asset pool than your partner. As a
result, the Court may determine that your contributions are 75% to
the other party's 25%. Therefore, although it is not excluded
from the asset pool, you will receive due credit for an injection
of funds or property into the asset pool that would not have
happened but for the fact that a relative of yours has passed
An inheritance received after separation may not be included in
the asset pool however, it will be counted as a financial resource.
Using the example above, if the sum of $500,000 was received after
separation or divorce, but before property settlement, a Court will
regard it as a resource. It may mean that the other party will
receive more of the $500,000 available, as you have a financial
resource of $500,000 that you can use in the future.
Another complicating factor with inheritance is that it often
involves a property, and work on the property by the partner who
does not receive the inheritance may increase its value.
Contributions to inherited property in this respect will be taken
into account under Section 79(4) of the Family Law Act.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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There are several requirements that must be completed by an executor before the distribution of assets to beneficiaries.
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