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How is an inheritance treated at separation?

A common question in a family law dispute is whether an inheritance received by one party will be excluded from the property pool to be divided between the parties. To understand how the courts are likely to treat inheritances, previous cases provide guidance on what may happen.

When there is a question on inheritances, a relevant factor is whether the inheritance was received during the relationship or late in the relationship, possibly even post-separation.

Inheritance Received During Relationship

An inheritance is ordinarily seen as a financial contribution to be attributed to the party who received it. It is not protected or excluded from the pool merely for being an inheritance.

Additional weight may be given to the contributions of the party who received the inheritance if the capital received significantly aided the parties in acquiring their current assets. This “springboard factor” was relevant in H v H (1981) FLC 91-083, where the Husband inherited capital and applied a portion of his inheritance to purchase the matrimonial home and build extensions. The home could not have been purchased without the inheritance.

In the matter of Kessey v Kessey (1994) FLC 92-495 it was held that absent evidence which establishes the donor’s intention to benefit both parties, a contribution by a parent to the property of the marriage will be taken to be a contribution made by that party.

Express evidence is required to illustrate an intention to benefit both parties and without such evidence the Court has found that gifts and inheritances are made for the benefit of the recipient due to the personal relationship between the donor and recipient (Essex v Essex (No 2) [2007] FamCA 639).

Therefore while an early inheritance will likely form part of the property pool, the recipient of the inheritance will be acknowledged to have contributed the funds and an adjustment can be made in their favour.

Inheritance Received Late in Relationship or Post-Separation

When an inheritance is received by a party during the late stages of a relationship or post-separation there is little possibility for the other spouse to have contributed to the inheritance received. Therefore the Court may take a two-pool approach and treat the inheritance separately.

This was endorsed in Bonnici v Bonnici [1992] FLC 92-272 which dealt with a 21 year relationship where the Husband received an inheritance two and a half years prior to separation and a second inheritance one year prior to separation. The Full Court stated that the inheritance was part of the property pool to be divided. However, the Court also decided that if there are sufficient funds in the property pool to reach a just and equitable settlement, then an inheritance received late in a relationship could be treated as an entitlement of the recipient. The Court in Bonnici held that the inheritance monies received by the Husband were not to be taken into account as part as the Wife had made no contribution to the receipt of those monies.

The Courts will always have the discretion on how to treat an inheritance and may still use a global property pool. In the recent decision of Calvin v McTier [2017] FamCAFC 125 the Husband received a large inheritance 4 years post-separation. At the time of the trial the inheritance made up 32% of the parties’ assets. Therefore the trial magistrate included the inheritance in the asset pool and found the Husband’s contributions to be 75%. Based on the future needs of the Wife, he then made a 10% adjustment to her so that she received 35% of the total asset pools, including the inheritance.

The Full Court confirmed the trial magistrate’s decision and held that the treatment of “after-acquired property” could have been dealt with in a global pool with the proper weight given to the Husband in recognition of his contribution or it could have been dealt with separately with acknowledgement that the Husband had a separate financial resource to draw on.

Inheritances and other gifts or winnings will be taken into account by the Family Court during family law proceedings. It may be part of a global pool or a two-pool approach may be taken. The weight the Court will give to “windfalls” such as these depends on:

  • Was the inheritance received during the relationship or post-separation?
  • Was the inheritance intended to benefit both parties or only the recipient?
  • Does the inheritance form a major percentage of the property pool?
  • What were the contributions made during the relationship?
  • What are the future needs of each party?

If you have received, or may receive, an inheritance it is important to get Family Law advice based on your specific circumstances in order to protect your assets.


For further information on this topic, please contact our Family Law department on 03 9614 5122