Question
of the week Question of the week

Curious. Interesting. Informative.

12 March 2021

Game plan

Family Law
Federal

Asked

Property settlement - Inheritance and contributions

Our client in a property settlement is about to inherit money from a parent who is close to death. We need to include an order that the client’s partner waives any claims over any inheritance that our client may receive. What wording do you suggest for this order? Also can we get the parent to sign something now to protect our client until final orders are agreed and filed?

Answered

Thank you for the question.

Until final property orders are made under s 79 of the Family Law Act 1975, no interim order will prevent the client’s partner making an argument that any inheritance received, or to be received, is properly included in the asset pool. Farmer and Bramley [2000] FamCA 1615 is authority for the proposition that the court has the power under s 79(1) to alter the parties’ interests in all their property, regardless of when or how it was acquired and in whose name it is owned. See also Holland & Holland [2017] FamCAFC 166 where it was held that the exclusion of any property from consideration is an error in principle.

Therefore, the best course if possible is to finalise the property settlement before the parent dies. Once they die, even if the client has not received the inheritance, the other side will probably seek to quantify the inheritance and include it in the asset pool. If the asset is included in the pool, the client would have a contributions argument, and may also argue that a separate pools approach should be taken with the inheritance. However, even if they received an assessment of 100% for contributions to the inheritance, it would still affect their s 75(2) factors, depending on the size of the pool, the size of the inheritance and the other relevant s 75(2) factors.

As to the second question, if the client’s parent still has testamentary capacity, they could change their will and exclude the client from the will, but this of course has other implications for the client.

Regards

Mentor