Jenni BlissettWhen couples separate they are often required to divide the assets and debts that have been accumulated during the course of their relationship.  There are a number of ways this can be done.  The couple can agree to divide their property without court intervention.  Where the parties cannot agree on how to divide their assets or debt it is possible to apply to the court for orders as to how their property and debts should be divided.

When a case goes to court to determine a financial order, the court generally begins by determining the assets and liabilities of the parties.  The court considers what direct financial contributions each person has made (such as wages), it considers indirect financial contributions (such as inheritances). The court  also considers non financial contributions such as caring for children, domestic duties and also the respective age, health and ability to earn income is taken into account.

There are a number of broad principles that will be considered by a court when determining how an inheritance could be considered.  Assets are not protected simply because they have been inherited by one party.

The court will look at when the inheritance was received and the stage of the relationship at the time of the inheritance.  Generally, when an inheritance is received very late in the relationship or after separation the court will treat it as a contribution made by the spouse who received it, however, this is not always the case.  The size of the inheritance in contrast to the other assets owned by the parties is also relevant.

When there are no substantial assets owned by the couple but there is an inheritance it is more likely the court will make an order for a property settlement from the inheritance, even if the inheritance was received after the date of separation.

This was illustrated in the case of Schirmer and Sharpe (2005). The facts were that the parties were married for 9 years. During the course of the marriage the parties had four children. The total net property at the time of separation was $9,000.00. At the time of the trial it was $833,833.00. The increase was mainly due to an inheritance the wife received three years after separation. The Trial Judge made an order which took into consideration the financial contribution made by the wife (being the inheritance) ordering the wife to receive 90% of the asset pool the husband to receive 10%. The husband appealed this decision but the Full Court dismissed the appeal and found that the Trial Judge to be correct.

When you are considering separating or have separated, you should seek legal advice. At Everingham Solomons we have the experience and expertise to assist you because Helping You is Our Business.

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