An inheritance after separation can be added to asset pool

When couples separate, they frequently need to attend Court to have the division of their assets decided by a judge. Since it can take a long time to progress through the Courts to a hearing, it is common for the asset pool’s value to change considerably. People often acquire further assets, increase or decrease the value of their assets and liabilities, increase their superannuation and even receive inheritances in the period between separation and the date of hearing.

Since the assessment of the asset pool takes place at the date of the hearing or settlement and not at the time of separation, anything obtained after separation is technically within the pool of assets available for distribution between the parties, including inheritances.

The Court considers each party’s contributions, both financial and non-financial, to the assets of the relationship and also each party’s future needs. Even though it would be hard to argue that the other party made any direct or indirect contribution to the inheritance of the other, in some cases, the inheritance will not be quarantined, particularly if it is the major asset.

The Courts can adopt a global approach to the assets and liabilities of the relationship (meaning all assets and liabilities are counted in arriving at a net asset pool available for distribution) or may prefer to adopt an asset by asset approach where the issue of contributions to various assets is assessed on a line by line basis, or even a multi-pool approach where certain assets are separately considered. The approach taken by the Court is a matter of discretion for the judge in each case.

Case study – husband’s inheritance included in asset pool after four years of separation

The case of Calvin & McTier [2017] FamCAFC 125 (12 July 2017) involved an appeal from the Magistrates Court of Western Australia to the Full Court of the Family Court on the issue of the treatment of post-separation assets, particularly an inheritance received by the husband four years after separation occurred. At the trial, the husband was unsuccessful in quarantining his inheritance from the assets available for distribution between himself and his wife and the judge adopted a global approach to the assessment of contributions. The inheritance comprised 32 per cent of the asset pool.

The Full Court ruled on appeal that the Court retains the power to decide how to approach the treatment of after-acquired property and can therefore make orders dealing with a post-separation inheritance.

The treatment of post-separation assets will always vary with the particular circumstances of each case. If you require advice about your property settlement matter, please contact Streeterlaw’s Family Law Accredited Specialist Simone Green, who has a wealth of experience in this area. Call us on 1300 293 593 or email advice@streeterlaw.com.au.