Money in a jar being held by dad and child

The seminal 1991 case of Bonnici & Bonnici has often been cited in matters where an inheritance is received by a spouse late in a marriage. In this case, it was argued that an inheritance received towards the end of a marriage should be “excluded” from the divisible asset pool as the “non-inheriting” party could not claim to have made a “significant contribution” to the inheritance.

Historically, the Family Court has placed considerable weight on the unilateral contribution by the recipient of an inheritance, regardless of the duration of the relationship. This has resulted in the Court failing to consider the financial and non-financial contributions of the non-inheriting party throughout the relationship, as well as their indirect contribution to the inheritance received.

The Family Law Act (“the Act”) empowers courts to make orders in relation to the alteration of property interests between parties to a marriage (section 79) or a de-facto relationship (section 90SM) “as it considers appropriate”.

It is important to note that the definition of “property” under the Act includes all of the property owned by the parties individually and jointly, irrespective of how or when it was acquired or in whose name the property is held. In essence, the Act makes no attempt to limit what is included in the asset pool and what is available for division.

Any attempt to exclude the property of the parties or either of them is incorrect, as it is an obligation of the Court to identify and adjust all property of the parties in accordance with section 79 or section 90SM of the Act. Thus, any inheritance or monetary gift that is unilaterally received by either party during the marriage or relationship or after separation until the making of the Final Property Orders must be included for consideration as part of the divisible asset pool.

In recent years, courts have shown different approaches to dealing with inheritances. The Trial Judge in the case of Aleksovski (1996) highlighted that reasonable consideration must be given to the value of all elements that make up the entirety of a relationship. In a long marriage, each party provided their labours “towards the acquisition, conservation and improvement of assets, and towards the welfare of the marriage generally.” In a short marriage on the other hand, “significant weight might be given to a large capital contribution.”

The timing of contributions, however, has created a paradox. Greater weight is generally given to a contribution which is made by a party closer to the time of separation. However, Courts have placed less weight (irrespective of the size of the inheritance) if the contribution is made by one of the parties early in the marriage or cohabitation period, particularly in circumstances where the inherited property has been subsumed over time to cover the payment of the parties’ expenses or to acquire other assets in a long relationship.

Proper recognition should also be given to a party who receives a substantial financial contribution, such as an inheritance, several years following separation. In the 2017 case of Widmann & Widmann, the husband received a substantial inheritance approximately six years after the parties’ separation, which the Court held to be “a matter of considerable relevance to contribution.” In this matter, the husband was awarded 65% of the asset pool due to his overwhelming financial contribution following the parties’ separation.

Ultimately, the onus falls on Judges to make an assessment on what weight should be placed on the contributions made by each of the parties throughout the period of the relationship and to translate this into a dollar figure or percentage adjustment of the overall property pool.

The current approach adopted suggests that there is no legal basis for the proposition that an inheritance received late in the marriage should be excluded from the property pool or treated separately.

Ultimately, all property available to the parties should be assessed in its totality and given proper weighting to determine what is just and equitable. In considering “late inheritances”, this modern approach has resulted in a more equitable division of property between parties.

The team at Vic Rajah Family Lawyers are highly-experienced in dealing with complex property matters and are able to advise clients about the treatment of inheritances received before or after separation.

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