The treatment of an inheritance can have a significant impact on negotiating a property settlement with a former partner.
Much depends on whether you have already received the inheritance or whether you are expecting to receive a future inheritance
If you have received an inheritance prior to separation, the likelihood is that it will be treated as part of the asset pool available for division between you and your former partner. This may not be the case, however, if you received the inheritance on behalf of someone else or you no longer have the inheritance at the time that you are negotiating a property settlement as you have spent it, lost it or given it away. You would need to provide evidence in support of your case.
In a recent Federal Circuit Court decision of Owen & Owen  FCCA 2823 the Judge did not accept the evidence of the Wife that she had inherited money on behalf of her children. The Judge found that she had chosen to gift $305,000 of the $428,000 she had inherited to her children after separation and that the children did not have any legally enforceable entitlement to the money.
If you are expecting a future inheritance, the property you are expecting to receive cannot be treated as part of the asset pool available for division between you and your former partner but it may be considered as a financial resource available to you under section 75(2) of the Family Law Act 1975. Relevant considerations are the age and state of health of the testator, whether they have capacity to change their Will and the size and nature of the potential inheritance.
What if you receive it after separation?
It may still be treated as part of the asset pool available for division between you and your former partner if you have not formalised a property settlement. This is particularly so if it was received soon after separation and there was still an intermingling of assets or contributions being made by either of you to the benefit of the other, including caring for any children of the relationship.
What can you do to protect a future inheritance from a claim?
Formalising a property settlement as soon as possible will give you peace of mind as it severs your financial ties and will prevent your former partner from making a claim on your assets. It is important to obtain legal advise early on, to enable you to make informed decisions about your options. For more information contact our office on (02) 6225 7040.