A common misconception for couples going through separation or divorce is that an asset received by them after separation is theirs and is excluded from the assets to be divided between them.

This issue was considered in detail in the 2017 case of Calvin v McTier [2017] FamCAFC 125. In this case the husband received a substantial inheritance approximately 4 years after the date of separation.

The facts

The relevant facts in this case are as follows:

• Separation occurred in 2011.

• The relationship was 8 years in duration.

• There was one child of the relationship and the child spent equal time with each parent.

• The husband made substantial initial financial contributions which consisted of two real properties, a motor vehicle, investments and superannuation entitlements.

• The wife did not have assets of significant value at the commencement of the relationship.

• The husband’s two properties were sold during the relationship and two other properties were purchased.

• The property pool at Trial was found to be $909,633.

• The husband received a substantial inheritance from his father in 2014. He had $403,686 of this inheritance remaining at the time of the Trial.

The Trial

At the Trial, the wife sought to include the husband’s inheritance in the property pool. The husband sought to exclude his inheritance from the property pool.

The Trial Judge found that:

1. The inheritance formed part of the property pool available for division which brought the value of the property pool up to approximately $1.3M;
2. Contributions were assessed as 75% to the husband and 24% to the wife.
3. The wife received a 10% adjustment in her favour in relation to future needs as there was a substantial earning capacity disparity between the parties.

This meant that the property pool, including the inheritance was divided 65% to the husband and 35% to the wife.

The husband appealed this decision.

The Appeal

The central issue on appeal was whether the Trial Judge erred by including the husband’s post-separation inheritance in the property pool.

The Full Court confirmed the Court’s broad discretion in determining the inclusion of certain property interests, including inheritance and that the Court had given appropriate weight to the husband’s contribution of the inheritance.

Conclusion

Assets received after separation, including inheritances can be included in the property pool for division between the parties.

An inheritance will be considered a contribution by the person who received it.

Parties can formalise a property settlement at any time after the date of separation. It is essential that steps are taken to formalise a property settlement as soon as possible to protect assets that you may accumulate in the future. In our experience delay in formalising a property settlement is not beneficial.

If you are going through separation or divorce contact us today to arrange a fixed fee initial consultation. Contact us on 07 3808 7777 or email us at business@mclaughlinlawyers.com.au