The emotional and financial complexities of separation or divorce is challenging. One common query raised in property division in family law is the treatment of inheritances. This blog is a brief explanation and overview of how courts handle inheritances in three distinct scenarios - inheritances received during the relationship, inheritances received late in the relationship or following separation, and the likelihood of receiving a substantial inheritance in the future.
Inheritances Received During the Relationship
Imagine inheriting a significant sum of money during your marriage. How would the court view this?
Courts can treat inheritances received during a marriage like any other contribution. Whether it’s your salary, your partner's investments, or an inheritance, all contributions are considered holistically.
Inherited assets don’t necessarily get special treatment just because they came from a family member. The court looks at the big picture, considering how both parties have contributed to the marriage.
The significance of the inheritance depends on the overall contributions made by both parties. If your inheritance significantly boosted the family’s wealth, it might carry more weight in the division.
Inheritances Received Late or Post Separation
What if you receive an inheritance late in your marriage or after separating? The court adopts a more nuanced approach.
Courts can adopt a two-pool approach, treating inheritances received late or post-separation separately from the main asset pool.
The court has the discretion to exclude these inheritances from the main asset pool when evaluating contributions, but they may still factor them into decisions about fairness and adjustments under the Family Law Act.
The decision to use the two-pool approach will likely hinge on whether the main asset pool is sufficient to ensure fairness to both parties.
Future Inheritances
What if you're expecting a significant inheritance in the future? Courts generally tread carefully here.
The likelihood of receiving a future inheritance is usually irrelevant if the testator (the person who made the will) is alive and has testamentary capacity (the ability to change their will).
If the testator has lost testamentary capacity and there’s a high probability of receiving the inheritance, the court might consider it a relevant factor.
Each case is unique, and courts may weigh the likelihood of a future inheritance if the testator can no longer alter their will. The timing of the inheritance also plays a role. If it’s uncertain, the court might not give it much weight.
Understanding how courts treat inheritances in family law property divisions is crucial for anyone facing separation or divorce. Inheritances received during a relationship are part of the holistic assessment of contributions, while those received late or post-separation might be treated separately. The prospect of future inheritances is typically irrelevant unless the testator has lost testamentary capacity. Given the unique nature of each case, it’s important to seek legal advice tailored to your scenario.
If you have any questions, please feel free to reach out!
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