You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox

Istock 476824114 Blog

Once you have made the choice to separate, it is likely you have started the difficult process of deciding how to divide your assets. For most people, this process begins with a ‘yours’ and ‘mine’ approach, whereby you separate assets into certain baskets depending on who they belong to.

Regardless of your process, it is vital at this stage to receive legal advice to ascertain exactly what it is you are entitled to. It is possible what you want, and what you are entitled to, may be two very different realities.

How does the Court divide assets?

The Family Law Act gives the family courts broad discretion to make orders in relation to financial cases, including orders for dividing assets between parties. Whether you were married or de facto, the family courts undergo the same comprehensive assessment of your assets and liabilities and consider your interests in property held by each of you prior to the relationship, those gained during the relationship, and those following separation. Courts also consider the future needs of each party.

With this information, family courts paint a detailed picture of what assets and liabilities are available to you. This list of assets and liabilities is often called a ‘property pool’. Before separating your property pool, a Court must be satisfied it is ‘just and equitable’ to do so.

One relevant issue for many clients is the treatment of a prospective inheritance or an actual inheritance following separation. Clients want to know how that future injection of funds is treated in a property settlement and whether they, or their former partner, are entitled to a portion of the inheritance.

This conundrum was considered by the Federal Circuit Court of Australia in the case of Gilmartin & Gilmartin [2016] FCCA 3135 in a judgement delivered in December 2016.

That case concerned a 25 year relationship where the value of the property pool at separation was modest, comprising motor vehicles and minimal savings. There were two children of the relationship aged 23 and 17 at the time of judgement. The Wife argued that the Husband’s inheritance from his late mother’s estate ought to be included in the property pool for division between the parties.

The Court held it was appropriate to make an adjustment in property orders in favour of the Wife. In doing so it quoted the authority of Bonnici v Bonnici (1992) FLC 92-272. The Full Court in that case considered that property does not fall into a protected category merely because it is an inheritance. However, if there are ample funds available for a just settlement, then the inheritance would normally be treated as an entitlement of the party in question. The Court also found that except in ‘very unusual circumstances’ a party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated.

The question then becomes, what constitutes ‘very unusual circumstances’.

In the case of Gilmartin, there was no evidence of the relationship between the Wife and the Husband’s mother. There was no assertion, for example, that the Wife contributed to the physical care of the Husband’s Mother prior to her death. In fact, for the last two years of the Husband’s Mother’s life, the parties had been separated.

Nonetheless, the Wife argued that ‘very unusual circumstances’ did exist in this case. The Court agreed, and found such circumstances were:

  • the absence of any other significant asset held by the parties;
  • the Wife's contribution as primary homemaker and caregiver during the course of the marriage;
  • the proceeds of sale of the former matrimonial home being used to partially repay a debt incurred by the Husband's family and the resultant protection of the Husband's Mother's own assets by that sale; and
  • that the Wife was a named beneficiary in the 2012 will of the Husband's Mother, despite a later will being made to remove her.

The Court accepted on that basis, in accordance the decision of Bonnici, that "very unusual circumstances" existed and therefore, the inheritance received after separation formed part of the property pool.

Gilmartin provides a useful indication of how an inheritance might be treated in property settlements. However, each family law case turns on its own facts and circumstances.

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

Thank you for your feedback.

Related blog posts

Family Law
Four key facts you need to know about your property settlement

When a marriage or a de facto relationship ends, the parties need to finalise their financial ties with one another. This may involve the transfer of ownership of real estate, cash, superannuation or other property from one party to another. For example, if the matrimonial home is in joint names the parties may agree that the house be sold and the proceeds divided. Alternatively, the parties may agree that one party receives the house and makes a cash payment of some nature to the other party to ‘buy out’ their interest. When you are separating, it is important to get legal advice from a Solicitor specialising in family law, in order to determine your entitlements. Any agreement reached...

105625090 Blog
Family Law
Can I change the locks?

“Can I change the locks?” – This must be one of the most common questions addressed by any family lawyer. The simple answer to whether a party going through separation can change the locks on a property they are living in is usually “yes”. If there is no court order which affects that person’s right to occupy the property, then in most circumstances there is little prohibiting a party from changing the locks. However the position can differ slightly depending on, which party legally owns the property. Where the property is owned by both parties Where the property is owned by one party Where the property is leased to you In all circumstances Perhaps the question asked should not...

Istock 475237296 Blog
Family Law
Call for urgent statutory reform regarding children with gender dysphoria

Intelligent and insightful teenager Lucas, had the support of his (separated) parents, psychologist, psychiatrist and endocrinologist to undergo stage two treatment for gender dysphoria. Yet, as a result of the 2013 decision Re Jamie, Lucas had to obtain permission from the Family Court so that he could start stage two treatment under the guise of assessing whether Lucas was ‘Gillick competent’. Gender dysphoria is a condition in which a child feels their identity and gender are not matched with his or her biological sex. Because of this, the child can suffer clinically significant distress or impairment in social functioning. The Court in Re Jamie decided that stage two treatment for...

We're here to help

Start your online claim check now. Or, if you have a question, get in touch with our team.