Skip to the content


Are Inheritances Included In Property Settlements?

The Court has a wide discretion about how they deal with inheritances received during a relationship as well as after separation when making property settlement orders.

Read More

Property Settlement

11 March 2019

By: Annmarie Farrell

The Court has a wide discretion about how they deal with inheritances received during a relationship as well as after separation when making property settlement orders.

Inheritances are not a protected category of property and will not automatically be treated differently from other assets available for distribution.

Inheritances received prior to or at the commencement of the relationship

Inheritances received prior to or at the commencement of a relationship are conventionally regarded as a contribution made by the party for whose benefit the inheritance was conferred.

In assessing how to divide the assets of the relationship, the Court does not quarantine or isolate the inheritance and return it in full to the receiving party at separation. Rather, the Court will account for how the inheritance was applied, and any subsequent contributions by the non-receiving party to the conservation and improvement of the inheritance. In a longer relationship, the “erosion principle” applies, whereby the strength of one party’s initial contribution is offset by the later contributions of the other party. Contributions, including inheritances received prior to the relationship, are assessed holistically and are evaluated over the course of the relationship right up until the date of settlement.

Case Study – Sinclair & Sinclair
In the 2012 case of Sinclair & Sinclair, the parties held over $7 million of assets, most if not all of which was contributed by the Wife who had received it from her father many years prior. The parties married in 1959, had 3 children and separated in either 1970 or 1985 (this was in dispute). The Court concluded that the parties had only directly contributed to 25% of the total asset pool, and the remaining 75% of the asset pool was unrelated to the direct contributions of either party. The Court awarded the Husband 12.5% of the asset pool on the basis of his contributions to the relationship.

Inheritances received during the relationship

Similar to inheritances received prior to a relationship, inheritances received during the relationship are generally considered contributions by the party upon whom the inheritance was conferred. Once again, the erosion principle applies, and if the parties are in a long relationship and making otherwise equal contributions, the Court may give no particular weight to the inheriting party’s contribution.

Case Study – Elgin & Elgin
In the 2014 case of Elgin & Elgin, the Court held that a $1.3m inheritance received 10 years prior to separation should be given no special weight. The parties were married for 40 years and had assets totalling $44m. The Court divided the property equally.

Inheritances received following separation

While historically post-separation inheritances were quarantined from the asset pool altogether, or simply weighted as a contribution made by the receiving party, recent case law suggests that the Courts are taking a more holistic and less mathematical approach to the assessment of post-separation inheritances in property settlement orders. In recent cases, the Courts have shifted their focus from isolating post-separation inheritances to instead evaluating all the contributions of parties to a marriage, particularly contributions by one party to the welfare of the family. Contributions made prior to the receipt of an inheritance are in some instances weighted equally, if not more, than the timing of an inheritance or upon whom it was bequeathed.

Case Study – Singerson & Joans
In the 2013 case of Singerson & Joans, the parties were in a relationship for 15 years and had 2 young children. Shortly after separation, the Husband inherited $3 million. The parties had accumulated assets of $4.8 million prior to separation. The Wife had made significant contributions toward building up the assets of the relationship and taking care of the children, both during and post-separation. Counsel for the Wife submitted:

“The husband in this case obviously feels a great injustice that his wife did not have anything to do with [the inheritance]. You might say that is right. There are lots of factual things that might emerge; he did not have any debts when he left home because she had been supporting him – had he, the value of his inheritance might have been reduced by the debts. You just cannot assume that this little treasure box was something to which no contribution had been made.”

The Court assessed the Wife’s contributions as against all the property of the marriage, including the inheritance, and awarded the Wife 47.5% of the asset pool.

Case Study – James
In the 1978 case of James, the parties were married for 13 years and had 2 children. The Husband inherited farming land from his father just after separation. Prior to separation, both parties had worked on the conservation and improvement of the farming land, expecting to inherit the property one day. Despite the farming land being inherited from the Husband’s parents, the Court considered that the Wife had made a contribution to developing the land, in addition to her contributions as homemaker and parent. The Court included the farming land in the asset pool and made an adjustment to the Wife.

Case Study – Calvin v McTier
In the 2017 case of Calvin v McTier, the parties were married in February 2002, they separated in April 2010 and were divorced in August 2011. The relationship was therefore of approximately 8 years duration. The parties had one child together who was born in 2005.

In January 2014, approximately 4 years after separation, the Husband received an inheritance from his late father’s estate. The inheritance constituted approximately 32% of the net asset pool.

In January 2015 the Wife issued an Application for property settlement. She also applied for leave of the Court to proceed with her Application out of time because the time limit to make her Application had passed. The Court granted her leave to bring the Application out of time in March 2015.

The Court assessed the parties’ contributions during the relationship as being equal however the Husband’s post-separation contributions were assessed to be substantially higher than those of the Wife because of the inheritance that he had received from his late father’s estate.

The Court ordered that the Husband was entitled to 75% of the net asset pool (inclusive of the inheritance) based on contributions. The Court then made an adjustment in favour of the Wife in the amount of 10% because of the disparity in the parties’ income earning capacities as the Husband earned significantly more than the Wife.

The Husband lodged an appeal to the Full Court of the Family Court, arguing that there was an insufficient nexus between the marriage and the inheritance which he received nearly four years after the parties had separated.

The Full Court dismissed the appeal and held that:

  1. It had the power to include the inheritance in the asset pool even if it was acquired a significant period of time after separation.
  2. The High Court decision of Stanford (in which the Court held it may not always be just and equitable to alter ownership of property of parties to a relationship) did not require property acquired post separation to be dealt with any differently to property acquired during a relationship nor did it require the Court to have a specific reason to interfere with any particular asset of the parties (namely the inheritance).
  3. There was no requirement for there to be a nexus between any specific asset owned by one of the parties and the marriage.

If you would like to discuss how an inheritance received by you or a partner is likely to be treated in a property settlement, please do not hesitate to contact one of our experienced family lawyers on (03) 8393 0144.

Other Insights

Back To Top