The law is quite clear – an inheritance received during the marriage or de-facto relationship and even after separation, is property the Family Court will include in the asset pool available for division.
However, the Court may treat the inheritance differently depending upon when it was received, the uses to which it was put, and the totality of the parties other contributions.
Generally speaking, the Court may regard an inheritance as a contribution by the party who received it. The other spouse can’t be regarded as contributing significantly to such an inheritance, except in very unusual circumstances. These might include the care of the deceased prior to death, or other financial and non-financial contributions to property owned by the deceased. For example, the husband may claim an interest in a home inherited by the wife, if he helped maintain the home.
In certain circumstances, such as where a spouse received an inheritance late in the relationship or after separation and did not “mix’ the cash or property with the parties own regular property, and there is enough regular property owned by the parties, the Court may follow a “two pools” approach by separating the inheritance from the regular property.
The practical effect of “quarantining” the inheritance is that it is not available for division, but the Court can take it into account when considering the future needs of the person who received it. Speaking on this point, Cronin J in Sinclair & Sinclair [2012] FamCA 388 at [23], noted that ‘isolating or quarantining an inheritance must be cautiously done to ensure that earlier important contributions to the family are not ignored’.
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.
