‍What happens to my inheritance in the Family Court?

An inheritance is property and is not quarantined from the pool. Where there are ample other assets, a recently received inheritance is normally treated as an entitlement of, that is a contribution by, the recipient.

Timing matters to weight rather than to inclusion: even a post separation inheritance is property of the parties or one of them and is not automatically off the table.

The assessment of a property settlement is holistic; contributions are weighed against the whole pool and are not quarantined to particular assets, so the recipient’s inheritance is measured against the other party’s total contributions. A large, late, wholly unmatched inheritance may still attract a substantial contribution finding for the recipient.

It may be inherently unfair that one person who has received an inheritance will have to share it with their spouse, especially if that spouse will (or may) receive a significant inheritance of their own years after the property settlement is completed. This is a very common complaint people have.

See also:

Singerson & Joans[2014] FamCAFC 238

Bonnici & Bonnici[1991] FamCA 86

Holland & Holland[2017] FamCAFC 166.

What happens to gifts given to me by my family?

Money or property given to a party by that party’s relative is, absent evidence of a contrary intention, treated as a financial contribution made by or on behalf of that party under section 79(4)(a).

‍Where the donor intended to benefit both parties, it may be a joint contribution. The characterisation turns on the donor’s intention on the facts; it is a contribution finding, not a proprietary claim by the donor. In the absence of documentary evidence, it is rare for a gift given by a parent, or from one side of the family to be anything other than a contribution of one party.

See also:

Kessey & Kessey[1994] FamCA 162

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What happens if I have a loan from my family?

A loan from a family member reduces the matrimonial asset pool as a liability only if it is a genuine, enforceable loan rather than a gift. The analysis and treatment of a loan in the family context in a property settlement pursuant to the Family Law Act (1975) is different from an arms length loan between other people, in civil or commercial contexts.

The indications that the Court will hold that a loan from a family member is genuine are the parties’ intention at the time, documentation and repayment terms, and evidence of demand and enforceability. It is the pattern of behaviour and not necessarily a single indica that will lead to a finding that an advancement is a loan.

An asserted loan without documentation, repayment terms or any demand is likely to be characterised as a gift, and hence a contribution. This can greatly disadvantage the person claiming that the gift is a loan; while they will get credit for the gift, it will not likely be accounted for “dollar for dollar.”

Families who benefit their children with a loan to buy their first home are often dismayed to find that the loan is classed as a gift, and they have benefited someone else’s child with their generosity when they did not intend to.

Any significant loan should be properly documented in writing, with repayments enforced or made in order for such a loan not to be wiped out by the Family Court as a gift.