Can parents’ money be factored into Family Law litigation between spouses?

The recent case of MacDowell and Williams and Ors has raised an interesting ethical and legal question regarding how far the Courts should interfere in the private financial affairs of third parties when determining the future financial resources of the parties to a marriage or relationship.

In this case, the issue was a subpoena served on the wife’s parents to provide any current and revoked wills and any relevant testamentary documents regarding corporate trust structures to which the wife was a beneficiary.

The counsel for the husband argued it was necessary to inspect the financial documents of the wife’s parents to understand the patterns of past distributions of the trust and realities of control of the various entities, arguing that such matters were relevant to the distribution of the marital property pool. The application failed because the Court found that the wife had no control over any of the entities from which the documents were sought on subpoena.

In respect to the wife’s parents’ wills, the counsel for the husband argued relevance on the basis that the wife may stand to inherit a portion of an estate of considerable value. The husband’s counsel could not satisfy the Court that the subpoena of the wills and financial documents was anything other than a ‘fishing expedition’.

The Court considered that the production of the wills, which were by nature private to parties not involved in the proceedings and which may hold little weight in the final determination of the matter, constituted an ‘abuse of process’.

In some cases, the Court has held that production of a will of a spouse’s parents or other relative is relevant to the process of deciding whether a property settlement is just and equitable. An expectancy may be relevant when one party has made a contribution to the property bequeathed, but the particular facts and circumstances would need to be carefully analysed by the Court.

Streeterlaw Accredited Specialist Simone Green, an expert in Family Law, said this case shows how cautious the Court is when determining the relevance of third parties in assessing financial settlements between spouses.

“On the whole, it stands that there is no automatic entitlement for a child to receive an inheritance from their parents or other family member,” Ms Green said.

“While there remains the opportunity for a third party to change their will or spend their money during their lifetimes, the Family Court has been hesitant to interfere with that right of the third party when deciding property settlements among separating spouses.

“It is necessary that a spouse’s interest in a parent’s will has progressed beyond a mere expectancy into a certain gift. This can occur when a parent has lost testamentary capacity and cannot legally change their wills.”