The division of marital assets can be difficult and lead to much conflict, particularly if an inheritance has been or will shortly be received by one party. Should the party receiving the inheritance keep it all or should it become part of the marital assets where the other party may receive a share? Ultimately whether an inheritance will become part of a property settlement is up to the unique circumstances of each case. Additionally, any order made by the Court regarding the division of assets must be “just and equitable” as per the Family Law Act. Continue reading to learn more from our family lawyers the relationship between an inheritance and property settlements.

Some things to consider as to whether inheritance can be included as part of the marital assets are:

When was the inheritance received?

Distinction will be made depending if the inheritance was bequeathed before, during or after the relationship. Any inheritance received after separation is unlikely to be included as a marital asset. If the inheritance was received during the relationship, it is likely that the funds were used to benefit both parties (i.e. build, renovate or buy a new property, go on a holiday, etc.) and therefore form part of the asset pool. In regard to any inheritance received before the relationship commenced, it will depend on how it was used. Was it an initial contribution to the relationship or kept as a separate fund maintained and controlled by the beneficiary?

Which party received the inheritance?

Usually only one party will be the beneficiary of an inheritance and therefore these questions must be considered in order to determine whether the inheritance becomes part of the net asset pool. However in some circumstances the inheritance will be bequeathed to both spouses and therefore the inheritance becomes a shared asset and equal contribution, capable of being divided in the property settlement.

What was the duration of the relationship?

The longer the relationship, the more likely that any inheritance received before or during the relationship will form part of the asset pool.

During the relationship, what were the contributions made by the parties?

Both non-financial and financial contributions are weighed equally in the division of assets. Homemaking contributions do not weigh any less than financial ones. In Figgins & Figgins the husband made a significant contribution in the form of a large inheritance after the untimely death of his father and step-mother. The wife appealed the decision made by the trial judge on the grounds that the property settlement was not just or equitable. On appeal the Judge emphasised that the contributions made by both husband and wife before and during the relationship were relatively equal. If it had not been for the inheritance, both parties would have received a fairly equal spilt of their net assets. In order to account for the wife’s homemaking and parenting contributions, she was awarded an increased percentage of the asset pool.

What is the value of the inheritance?

If the inheritance received is substantial in comparison to the divisible pool of assets, it maybe the case that allowing the beneficiary to keep the entire inheritance would not be just or equitable. The contributions and entitlements of both parties need to be adequately and equally recognised. In Granger & Granger both parties had received inheritances during the relationship. The wife argued that her larger, more recent inheritance should be excluded from the asset pool. The Court disagreed as the husband’s inheritance was included in the asset pool despite the inheritance being largely reduced from its initial value. The Judge ruled that the wife’s inheritance be included in the asset pool as not to do so would risk the husband’s contributions during the 40 year marriage to be undervalued.


Ultimately whether an inheritance is included or excluded in a property settlement will be determined by the individual and unique facts of the case. Each parties contributions will need to be considered and valued so that whatever the result of the property settlement, each party leaves with a ‘just and equitable’ share of the asset pool. Additionally, the Court will need to consider the future needs factors of the parties such as their age, health, earning capacity, etc and make allowances if necessary.



Our team of experienced family law solicitors can assist you on a wide range of Family Law matters, including inheritance and property settlements, property matters, parenting matters, divorce applications, de facto and same sex relationships, mediation / court representation, and much more. We invite you to contact us on 1300 749 709 to discuss the options available to you.

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