Fam­i­ly Law  It’s mine, I got it after we broke up

In fam­i­ly law dis­putes it is a com­mon mis­con­cep­tion that an inher­i­tance or oth­er large sum received after sep­a­ra­tion will not be includ­ed in the prop­er­ty pool to be divid­ed between the parties.

The issue has been high­light­ed in many cas­es before the Fam­i­ly Court includ­ing inher­i­tances, lot­tery wins and oth­er ​‘wind­falls’ received by one of the par­ties after the rela­tion­ship has ended. 

Once par­ties have decid­ed to sep­a­rate, ide­al­ly they should finalise out­stand­ing prop­er­ty and finan­cial issues with­out delay. How­ev­er the par­tic­u­lar cir­cum­stances may not allow this to occur. 

Par­ties who are divorced have 12 months from the date when the divorce becomes final in which to file a Appli­ca­tion for Prop­er­ty Orders. De fac­to par­ties have two years from the date of final sep­a­ra­tion. Only in excep­tion­al cas­es will the Court grant leave to a par­ty to file an appli­ca­tion ​‘out of time’.

What hap­pens if one par­ty receives an inher­i­tance after the break-up?

In Calvin & McTi­er [2017] FAM­CAFC 125 the Full Court of the Fam­i­ly Court of West­ern Aus­tralia heard an appeal by a hus­band who argued that an inher­i­tance received four years after the par­ties sep­a­ra­ted should not be includ­ed in the prop­er­ty pool to be divid­ed between him and his ex-wife. 

At tri­al, the Court heard that the par­ties were mar­ried for eight years and divorced in 2011. They had one child who was five years old at the time of sep­a­ra­tion. Three years lat­er the hus­band received an inher­i­tance from his father’s estate. The Court grant­ed the Wife leave under sec­tion 44 (3) of the Fam­i­ly Law Act to pur­sue a prop­er­ty set­tle­ment claim.

The Tri­al Judge includ­ed the hus­band’s post-sep­a­ra­tion inher­i­tance ­in the par­ties’ prop­er­ty pool avail­able for divi­sion. The inher­i­tance of $430,686 account­ed for about 32% of the asset pool. The hus­band argued that his inher­i­tance should not be includ­ed in the pool because there was no con­nec­tion between the inher­i­tance and the par­ties’ mat­ri­mo­ni­al relationship. 

On appeal, the Court dis­agreed with the hus­band. The Court deter­mined that there did not need to be a direct con­nec­tion between the mar­riage and the item of prop­er­ty, rather that ​‘prop­er­ty’ includes prop­er­ty of the par­ties, or either of them, at the date of hear­ing. The hus­band’s appeal was dismissed. 

The Full Court approved this deci­sion in two oth­er cas­es, Hol­land & Hol­land [2017] Fam­CAFC 166 and Wid­mann & Wid­mann [2017] Fam­CAFC 602. 

There is anoth­er issue to con­sid­er when an inher­i­tance or oth­er asset in dis­pute is includ­ed in the asset pool. The Court will make an assess­ment of the finan­cial and non-finan­cial con­tri­bu­tions that each par­ty has made to the acqui­si­tion and main­te­nance of the assets. This is not always a sim­ple task.

In Calvin & McTi­er the effect of the hus­band’s inher­i­tance being includ­ed in the asset pool was that he was con­sid­ered to have made a greater finan­cial con­tri­bu­tion. Although unsuc­cess­ful in hav­ing his inher­i­tance ​“quar­an­tined”, his con­tri­bu­tions were deter­mined at 75%, and after mak­ing a 10% adjust­ment to the wife for future needs, the Court divid­ed the prop­er­ty pool 65% to the hus­band and 35% to the wife.

In sum­ma­ry, the Fam­i­ly Court con­tin­ues to retain a dis­cre­tion as to how to treat items of prop­er­ty that are acquired after sep­a­ra­tion. There is there­fore no sin­gle way the Court will deal with these assets, so it is impor­tant to obtain legal advice about your par­tic­u­lar cir­cum­stances before you make any deci­sions about divid­ing prop­er­ty with your ex-partner.