Timing is everything… or is it?

Published in the Coffs Coast News Of The Area on 17 May 2024.

After twenty years together, David and Wendy’s marriage breaks-down and they decide to get divorced.

Prior to David and Wendy’s relationship breakdown, David’s father passes away and he receives a significant inheritance of $500,000.

David’s inheritance complicates the upcoming property settlement as Wendy believes that she is entitled to a 50% share. This windfall becomes a central point of contention as the couple untangle their finances.

The question of whether Wendy has a claim to David’s inheritance isn’t a simple yes or no, it depends on when David received the inheritance and how it was used.

While inheritances may be designated as the inheriting spouse’s sole property, the length of the marriage and how the money is spent can influence the outcome of the asset split. If the inheritance was received well into the marriage and utilised for the benefit of the couple or family, or the purchase of property or a car, this would intertwine David’s inheritance with the matrimonial assets. Under these circumstances the inheritance is generally deemed to be a part of the asset pool for distribution. Therefore in David and Wendy’s case, Wendy would likely receive a share in David’s inheritance.

If David received his inheritance prior to finalising a property settlement but after he and Wendy separate, generally the inheritance would be considered David’s money. However, Wendy’s financial contributions during the marriage or an unfair settlement could blur the lines, potentially impacting the division of the asset.

If David received his inheritance after finalising a property settlement, Wendy’s claim to the inheritance significantly weakens. Unless their settlement included specific provisions regarding the inheritance, which is unlikely, the money would remain David’s.

As David and Wendy’s story illustrates, inheritance in the context of divorce involves a delicate balance of timing, contributions and legal precedent.

Thank you to Anthony Fogarty for his assistance with this column. This column is only accurate at today’s date and cannot be relied upon as legal advice.