When completing a property settlement, one of the considerations made is “what contributions were made by the parties?” Contributions come in all shapes and sizes, and can include inheritances which were received prior to the relationship, during the relationship, and following the breakdown of the relationship. When the inheritance was received, its quantum, and how the inheritance was applied will impact how much weight/credit is given to the contribution. It is common for an adjustment of the property settlement to be made in favour of the party who received the inheritance, however there is no set formula, and the weight/credit applied is at the discretion of the judicial officer hearing the case.
Another consideration in a property settlement is the future needs of the parties, including any changes to their financial circumstances by way of impending inheritance. If a party is a beneficiary of a deceased estate and awaiting distribution of the estate, the nature and quantum of the inheritance could be relevant to the outcome of the property settlement. If there is going to be a discrepancy in the parties’ financial circumstances as a result, it may be appropriate for an adjustment of the property settlement to be made in favour of the party who is not receiving the inheritance; again, there is no set formula, and the adjustment applied (if any) is at the discretion of the judicial officer hearing the case.
What is not as clear is what weight/credit, if any, should be applied to the possibility of a party receiving an inheritance. For example, this question arises where one party has an elderly parent and can expect to receive an inheritance upon their parent’s passing. Consideration needs to go beyond the possibility of a party receiving the inheritance and consider the probability of the party receiving the inheritance. If the party’s parents are elderly, but otherwise healthy, well and have testamentary capacity (meaning they have the capacity to amend the terms of their Will at any point in time) then the fact that the party is to receive an inheritance at some time in the future will likely only be deemed a mere expectancy; a mere expectancy will have little if any weight in a property settlement. However, if that party’s elderly parent is unwell and has lost capacity (meaning they are unable to amend the terms of their Will), the fact that the party to the property settlement is due to receive an inheritance at some point is likely to be seen as a relevant factor when considering the parties future needs.
If you need advice about how any inheritances, received or due, may be dealt with in your property settlement you should obtain specialist family law advice. Contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.
Author: Peta Sutton