Article

Inheritance and family law

6 April 2015

Dividing property after the breakdown of a relationship is rarely easy. Raw emotions can lead to increased conflict particularly when talking about past contributions and future needs. The complexity is increased if issues of inheritance are involved.

Should the wealth of an elderly parent be factored in to your property settlement? In most cases, the answer is no, as the expectation of an inheritance is an uncertain benefit. There is no way of knowing whether or not you will receive a bequest and how much you may get. A parent with testamentary capacity can always change their Will. In some cases, though, a large prospective inheritance may still be taken into account when calculating your future needs particularly if the other party contributed substantially to your expectation of that inheritance. An example might be if your wife assisted your mother to live with your family or your husband substantially renovated your father’s house.

What if a testator (person making the Will) has dementia and is therefore unable to change their Will? In this situation the court is more likely to make a percentage adjustment taking this into account, particularly if there is some certainty as to the amount which will be inherited and the timeframe in which the inheritance is expected. An inheritance may here be treated as a financial resource that will be available to you in the future that can be set off against your future needs.

What happens if you received your inheritance during the relationship? An inheritances or gift is generally treated as an indirect financial contribution to the couple’s financial pool. Each case will be decided on its own facts with the court taking into account when the inheritance was received, the size of the inheritance and the size of the total asset pool. If the inheritance constitutes a substantial proportion of the asset pool it is more likely to form part of the property settlement particularly if there were significant financial or non-financial contributions to the relationship made by the non-inheriting party.

This is an area of the law that can cause a lot of uncertainty. If you have any questions, please contact us for confidential advice and assistance in determining how the law will apply in your particular situation.