How to Divorce, What happens to inheritances?

22nd December 2014

By Lisa Wagner

Separation and divorce is unique in every family. However, if you are separating there are often common issues that arise.

In my busy family law practice people often express disappointment to me about the lack of effort or work their former spouse undertook during their relationship.

This complaint does not seem to be particularly made by husbands or by wives and does not seem to only be an issue for parties that separate after a long marriage. It features as prominently after short-term relationships breakdown.

Occasionally certain types of endeavours attract a greater criticism. Business assets are one example of this. “She did nothing on the farm!” or “He never helped me with my bookkeeping…and he was an accountant!” are words I have heard on at least a handful of occasions.

How does the Family Court really assess contributions in a marriage? Is there a presumption that parties contributed equally to the growth and maintenance of their net marital wealth?

There is no presumption of equality of contribution in marriage when the Court considers how to divide assets upon a separation. This has been the law since Mallet v Mallet [1984] 156 CLR 605. Each case however must be examined on its own individual circumstances. In long marriages it is often difficult to persuade the Court that the contributions by the separating parties to the net matrimonial assets pool should be regarded as anything but equal. It is also often challenging to persuade the Court to include an inheritance, particularly a recent or a substantial one, into the pool without having particular regard to it.

When is a finding of parties contributing equally to a marriage made? The recent case of Talbot & Talbot [2013] FamCA 671 was such an example. In that case, the parties married in 1973 and had remained married for thirty one years. At the time of the hearing the husband was in his mid-sixties and the wife was approaching fifty nine years of age. They had both worked in agricultural enterprises and various real properties that they had accumulated during their long marriage.

At the hearing their net assets amounted to $1.5M, including superannuation entitlements. Some of these assets were held by the husband in a partnership with the adult son of the relationship. At trial the wife asserted that she had made contributions to the farming and real property businesses of the parties undertaking some administration, cooking and cleaning, filing and other like chores and devoting time and manual labour to each pursuit. The Trial Judge held that these contributions were both substantial direct and indirect contributions to the partnership assets.

In this case, each of the parties had received significant inheritances. The wife had inherited the sum of $148,000 and the husband had inherited the sum of $60,000. The Court chose not to quarantine these contributions but found that neither party had directly contributed to the other’s inheritance and in all of the circumstances awarded the wife 52.5% of the net matrimonial pool of assets and the husband 48.5% of the net matrimonial pool of assets. A relatively small adjustment of 1.5% was then made in favour of the husband because his future needs outweighed those of the wife including the Court taking into account the wife’s prospect of receiving a further significant inheritance down the track.

We have Accredited Family Law Specialists and registered Family Dispute Resolution Practitioners who can help you through the separation and divorce process. If you would like to talk about your particular matter and the very difficult and distressing issues you are facing then call me, Lisa Wagner of Doolan Wagner Family Lawyers on 9437 0010 or email me on enquiries@familylawyersdw.com.au.

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These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

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