 |
| |
|
 The relevance of inheritances and gifts in property settlement |
|
 |
|
 |
|
There are three general principles which the court applies when determining the redistribution of marital assets in property settlement proceedings. Firstly, the court must identify and quantify the parties' assets, liabilities and financial resources. Secondly, it must asses the contributions both parties have made towards the building of nett assets and divide nett assets accordingly. And thirdly, it must determine if any further adjustment needs to be made as a result of any disparity in the relative financial position of each party for the future.
The contribution component includes a consideration of inheritances and gifts which either party has received during the marriage.
Consider this scenario. A wife's mother passed away and in her Will left $50,000 to the wife who subsequently applied that money to make improvements to the matrimonial home. How would the court treat this contribution when determining property division?
Generally the court would categorise the wife's inheritance as a direct financial contribution "on behalf of" the wife.
Consider another scenario. A wife's mother gave a cheque for $50,000 made payable to both the husband and wife for the purpose of paying off a mortgage on the matrimonial home. How would the court treat this contribution when determining a property division?
The court will still categorise the gift as a direct financial contribution "on behalf of" the wife unless the husband can establish by evidence that the wife's mother intended that the gift was to benefit both the wife and the husband.
The court takes the opinion that in many such cases a gift is made in such a way only because of that family relationship and as a means of benefiting that relative in that marriage.
Will the court consider a likely inheritance? Only in the most exceptional circumstances will the prospect of an inheritance and its value be a relevant issue in property proceedings and in the majority of cases the weight given to such a resource is minimal, if any. This is because the court considers a Will is merely an expression of intention from time to time and may be freely revoked or altered and has effect only on the death of the Will maker. In other words, it is not a definite financial resource which a party can call on at any time. Many things could occur between the time that a Will is first made and the death of the person, including a 'falling out of favour', which may inspire the Will maker to change the original Will.
Issues which may render an expected inheritance relevant in property settlement proceedings will include the age of the relative or other relevant Will maker, state of health, some general assessment of his or her financial position and some assessment of the suggested expectancy. However, the court will still be wary of guessing the elements of fate and as yet there have been few cases in which an expected inheritance have been a substantial consideration in property settlement proceedings.
If you or your spouse have received a substantial gift or inheritance prior to your marriage and this gift or inheritance was then contributed to the marital assets this will be considered relevant as an initial contribution to the marriage on behalf of the beneficiary or recipient.
There is no set formula used to divide assets. That decision is made on the evidence presented and the judge decides what is just and legally fair on the unique facts of every case. When consulting with your solicitor about your property settlement you should definitely advise them of any gifts or inheritances which you or your spouse have received as it is possible it many have considerable bearing on the ultimate outcome of your case.
February, 2001
|
|
 |
|
