20 September 2021, By Brett Hartley of Hartley Family Law
A recent Full Court decision in June 2021, highlighted the fact that all inheritances are not treated equally.
The case involved a long marriage with adult children.
Both the husband and the wife had received inheritances during the relationship, and there was a modest pool existing today of somewhere in the vicinity of $1.3 million at the time of separation.
Both inheritances were received about 10 years or more prior to separation.
The wife’s inheritance had a value at the time of about $50,000.00 (being a share of a property) and distributions were made to the children of various family members from that property but not to the husband or wife themselves.
On the other hand, the husband’s inheritance was worth about $450,000.00 and this property was also put into a Trust and there were distributions made over time which had the result of providing benefit to the parties as well as some tax relief.
The Full Court noted that even though this was a long marriage and even though one must take a holistic approach and consider the “myriad of contributions”, it was still relevant and necessary to identify and assess the contributions and give weight to certain contributions over others.
In the circumstances of cases such as this, the size of the inheritance of the husband was close to one third of the current asset pool available for division and also the inheritance had been put to use by providing an ongoing income stream and tax benefit to the parties during the relationship. This was also a relevant consideration.
The Full Court noted difficulties with jumping from a qualitative assessment of contributions to a quantitative one but said that it was simply not discernible from the reasons of the Trial Judge as to how a 50/50 outcome is reached when assessing contributions having regard to the greater financial contribution of the husband in the form of his inheritance.
This case is a good reminder of the need to have specific evidence of not only the quantum and timing of when an inheritance is received, but also to provide detailed evidence and particulars about how that inheritance provided future benefits to the parties. The benefits provided by an inheritance could be many things – they could relate to providing extra income for the welfare of the family and/or could result in the acquisition of further property and thus, the inheritance could be a springboard for future acquisition of wealth by the parties. On the other hand, an inheritance, if small in value and spent on luxury items, pursuits or lifestyle, may provide little ongoing benefit to a party in a long relationship.
There is no strict rule of excluding inheritance’ from the property settlement exercise, nor is there a strict mathematical formula applied to adding back inheritances. Each case is unique in terms of it’s particular facts and it is always important to have expert family lawyers acting for you, so as to advise you properly of your entitlements and to ensure that property evidence and particulars are provided that assist the presentation of your case.
If you need any advice in relation to your inheritance or the likelihood of inheritance affecting your family law matter and/or property division, please do not hesitate to contact Brett Hartley or our client services manager, Tyanne Su’A to discuss same.
