Inheritance – What Happens to Them In Divorce Property Settlement
An article was written for accountants and financial advisors by Vanessa Mathews of Mathews Family Law & Mediation Specialists.
Your client has the good fortune to receive a ‘windfall’, such as an inheritance or a lotto. Your client and their partner separate.
Will the windfall be included in the property settlement asset pool?
Your client will likely answer ‘No Way’!
From the court’s perspective, windfalls are not a special category of contributions and they must be:
- Included in the asset pool.
- Considered in the same manner as, and holistically with, all of the other contributions made during the relationship – financial, non-financial, homemaker and parenting.
The timing of the windfall will however be relevant as to how the windfall is ‘shared’:
- A windfall received early in the relationship is likely to be treated equally.
- A windfall received shortly before separation is less likely to be treated equally.
- A windfall received after separation is even less likely to be treated equally.
The short answer is that the windfall is unlikely to be retained in full by your client.
I’ll leave it to you to break the bad news to them.
Next Steps Before a Divorce Property Settlement
You and/or your client may benefit from discussing the circumstances of the inheritance or other windfall and divorce property settlement before taking any action such as distributing or disposing of the asset in a manner that may adversely impact your client.
Vanessa Mathews is a family law specialist solicitor with the expertise and experience to advise you about your family law property settlement issues.
Please call Mathews Family Law & Mediation Specialists on 03 9804 7991 or email [email protected] to speak with Vanessa Mathews or one of our other family law attorneys regarding any family law property matters.
Resources
Mathews Family Law – Dividing the Property: https://mathewsfamilylaw.com.au/divorce/divorce-videos/dividing-the-property-in-victoria/
Family Court of Australia: http://www.familycourt.gov.au/wps/wcm/connect/fcoaweb/home
Federal Circuit Court of Australia: http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home
