Generally speaking, inheritances are not excluded or otherwise quarantined from the asset pool to be divided between separating parties, and will not automatically be allocated back to the party who received them.

Some of the relevant factors the Court takes into account are as follows:

Timing and length of a relationship

For example, an inheritance received very early in a long relationship might not result in a significantly higher contributions assessment to the party who received it, because the other party might have made other contributions over the years which offset the effect of the inheritance.

An inheritance received late in the relationship or after separation in a short relationship, is more likely to result in a higher contribution assessment to the party who received it.

Amount received

The amount received – and compared with the asset pool to divide – will affect the Court’s ultimate decision.

For example, a smaller amount (say $20,000 inheritance in a pool of $1.5m) is less likely to result in contributions being assessed in favor of the party who received it than a larger amount (say $1m in a pool of $1.5m).

How it was applied

If the money was used for family holidays or otherwise spent and is no longer represented in the asset pool, it will carry less weight when assessing contributions than if it was used to purchase real estate or shares and those assets still exist at the time the Court is making a determination. It may also be relevant if the funds have been kept separate and not otherwise mingled with the parties’ assets.

Financial circumstances of the parties at the time the Court makes a decision

In a pool of $1m, where one party receives a post-separation inheritance of $500,000, it might not be just and equitable for one party to receive half of the net assets ($500,000) and the other to receive the other half plus the whole inheritance ($500,000 plus $500,000). The Court will consider the whole financial situation.

Inheritances received after separation

If one party receives an inheritance after separation but before property settlement has been agreed and formalized, the inheritance will be taken into account in the property settlement as the Court must consider all of the current financial circumstances at the time the determination is being made.

This is one of the reasons why it is recommended that separating parties finalize and formalize their property settlement as soon as possible.

This does not necessarily mean that the other party will receive a portion of the inheritance. The Court might determine that the other party made no contribution to the inheritance, but it will be taken into account and adjustments might be made in favor of the other party who does not receive the inheritance.

Future inheritances

A future inheritance will usually only be taken into account if the death of the testator is imminent.

As the inheritance has not yet been received, the Court could not include it in the asset pool but can take it into account in assessing the respective future needs of the parties.

How can an inheritance be protected against claims by the other party?

Parties to a marriage or de facto relationship can protect future inheritances by entering into a Binding Financial Agreement which sets out how any inheritance would be dealt with in the event of separation.

If parties have separated and there is a possibility that one party will receive an inheritance in the future, it is recommended that they finalize their property settlement as soon as possible, and before the death of the testator.

Specialist Family Law advice is essential. Let your client know about our free initial telephone consultation service by calling Vanessa Mathews on 9804 7991.

We’re operating as usual at Mathews Family Law. If you have any questions or concerns about how COVID-19 may impact your client’s position in relation to their family law matter, call Vanessa Mathews on 9804 7991 or email enquiries@mflaw.com.au.

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Listen to some of our recent podcasts that discuss common issues in Australian Family Law.

Mathews Family Law & Mediation Specialists has initiated an e-newsletter, to be published monthly with an family law article of interest to professionals including accountants, financial advisers and mental health workers. Please email enquiries@mflaw.com.au if you would like to receive the newsletter.

I recently had my first encounter with ‘Bitcoins’, a new and modern form of currency that, like savings, are included in the matrimonial asset pool.

‘Bitcoin’ is a form of digital currency.

‘Bitcoin’ can be used for the payment of goods and services.

In this particular case, the value of the ‘bitcoins’ had significantly increased and was considered by the parties to have been an excellent investment. Much of the ‘bitcoin’ market is speculative, and the value of ‘bitcoins’ is therefore very much subject to fluctuation.

The ‘bitcoin’ investment was valued according to the current market value and included in the assets of the marriage to be divided between the parties.

Whether it ‘is bitcoin’, an e-commerce business or an ‘app’ in the development phase, the team at Mathews Family Law & Mediation Specialists, Australia Divorce, is able to provide you with expert legal advice about your property settlement entitlements.

The court imposes mandatory dispute resolution prior to applying to the court for child related matters in hopes that couples are able to resolve their issues and reach an agreement on their own terms.

Some couples will fall short of this goal and will have to resort to litigation to reach an agreement. However, some couples will succeed and, viola! The dispute resolution will have been effective and agreement, which once seemed impossible, has occurred.

So what happens once you reach an agreement?

The details of the agreement can be recorded in a parenting plan, which can be renegotiated over time. The agreement must be written, dated, and both parties must sign it in order for it to be valid. If you intend to make this plan permanent and final, you can subsequently apply to the court to have the agreement made into a consent order, in which case it becomes legally binding.

Bear in mind that changes made in your parenting plan may in turn have an affect on child support, income support, and family assistance payments. Also, if your parenting plan dictates an amount for child support, the Child Support Agency has the authority to enforce the agreement.

Unfortunately, domestic disputes can lead to feelings of anger and resentment, which can manifest itself through violence. Sometimes violence is even the reason couples are seeking a divorce. If you and your former spouse have a particularly tumultuous relationship you may feel as though sitting in the same room and being forced to talking about your issues could escalate into violence.

So what do you do if dispute resolution is a mandatory step before you can apply to the court for child related orders?

The requirement to undertake dispute resolution is waived in situations where there has been a history of, or there exists a risk of, family violence or child abuse. The court has no expectation that you will attend dispute resolution if your safety is at issue in any way.

If your situation is not extreme enough to call for a waiver of this requirement, the logistics of your dispute resolution session may be altered to accommodate your apprehension. For instance, it may be possible to conduct the session with the parties in different rooms rather than siting face to face.

Your safety prior to, during, and after dispute resolution is of paramount importance. If you have any concerns about violence you should notify your family dispute practitioner or a staff member at the dispute resolution center immediately. You should also be vocal about this concern with your lawyer if you have one. Do not be afraid to bring this up – your safety is nothing to be shy about.