Understanding the Assessment of Inheritances in Australian Family Law Property Settlements

The division of assets in a family law property settlement can be a complex and contentious process. One area that often raises questions is how inheritances are treated. Inheritances can be a significant portion of a couple's assets and may come from various sources, such as parents, grandparents, or other relatives. It is essential to understand how inheritances are assessed in Australia’s family law property settlements to ensure a fair and equitable division of assets.

The Legal Framework

In Australia, the Family Law Act 1975 governs the division of property between separated couples. The Act sets out the principles that the court must consider in making property settlement orders. The court's primary consideration is to achieve a 'just and equitable' division of property. In determining what is just and equitable, the court will consider the following factors:

1. The financial and non-financial contributions of each party
2. The future needs of each party
3. Any other relevant factors, such as the practical effect of the proposed division of property

How Inheritances Are Assessed

Inheritances are generally considered to be a financial contribution made by one party to the relationship. However, the treatment of inheritances in property settlements is not straightforward and will depend on several factors:

1. Timing of the Inheritance: The timing of the inheritance can have a significant impact on how it is treated in a property settlement. If the inheritance was received during the relationship, it may be treated as a contribution made by the party who received it. If the inheritance was received after separation but before the property settlement, it may still be considered in the division of assets, but the court may give it less weight.

2. Use of the Inheritance: How the inheritance was used during the relationship can also affect its treatment in a property settlement. If the inheritance was used for the benefit of both parties, such as paying off a joint mortgage or renovating the family home, it may be treated as a joint contribution. If the inheritance was kept separate and not used for the benefit of the other party, it may be treated as a contribution made by the party who received it.

3. Nature of the Inheritance: The nature of the inheritance can also affect its treatment in a property settlement. If the inheritance consists of a specific asset, such as a house or a piece of land, it may be treated differently than if it were a sum of money. The court may also consider the sentimental value of the inheritance and whether it should be retained by the party who received it.

The Court’s Discretion

Ultimately, the treatment of inheritances in a property settlement is at the court's discretion. The court will consider all the circumstances of the case, including the factors mentioned above, to determine what is just and equitable. It is important to note that each case is unique, and the court's decision will depend on the specific facts of the case.

Conclusion

Inheritances can play a significant role in family law property settlements in Australia. The court will consider several factors, including the timing of the inheritance, how it was used, and its nature, to determine its treatment in the property settlement. As the court has broad discretion in this area, it is important to seek legal advice to understand how an inheritance may be assessed in your specific circumstances.