How does my inheritance affect my family law property settlement?
by Matthew Elvin
Inheritance does have an effect on the outcomes of Family Law property/financial cases. The timing of the inheritance is crucial.
On the one end of the spectrum is inheritance received after separation, but before property settlement is finalised. In this case, you can expect to keep a lot of the inheritance, but probably not every dollar.
On the other extreme, if you received inheritance at the beginning of a 20 year relationship, your inheritance would essentially be included in the â€˜asset poolâ€™ of the relationship along with every other asset (such as house, car etc.) and divided up in the usual way. In this circumstance, you are therefore unlikely to receive much more than a nominal â€˜loadingâ€™, or percentage increase in your favour.
However, the size of the inheritance received is an important factor that can alter the outcome, despite the timing of the inheritance. For instance, if you received an amount of inheritance which was very large compared to the overall asset pool at the time, then you can expect to get more of a loading in your favour at settlement than if the inheritance is small. Therefore, in a situation where an inheritance was received 20 years ago, but it was 99% of an asset pool, the person who inherited that money can probably expect more than a nominal loading in their favour.
Another factor is where the non-inheriting party has â€˜contributedâ€™ towards the inheritance. For instance, it may be the case that the non-inheriting party for many years helped care for the other partyâ€™s sick parent before they died (and left everything to their child). The caring that the non-inheriting party did would count as a â€˜contributionâ€™ towards that inheritance, and therefore be factored in to the property settlement.
A final area of relevance is â€œexpected inheritancesâ€. For instance, if one of the parties has rich elderly parents, it might lead their ex-spouse to think that they have an â€œexpectationâ€ of inheritance, and therefore the expected inheritance should be counted as an asset. This is not usually the case, because people live a long time and a Will can easily be changed. However, there are exceptions to the general rule, and, in some rare cases, courts do recognise expected inheritances. For instance, if a personâ€™s last remaining wealthy parent is so sick that they are more likely than not to die in the near future, then the inheritance may possibly be factored in. This is especially true if the dying parent has lost mental capacity and wrote their Will earlier in life when they had capacity, meaning that they can no longer change their Will.
If you have a question about inheritance and your family law property settlement, do not hesitate to contact Theobald Lawyers for confidential advice.
Contact us to arrange a chat with one of our legal professionals. It doesnâ€™t hurt to ask.
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