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What can happen to your inheritance when you separate from your ex-partner?



The division of property after a separation can be a messy and confusing process. Many people believe that any assets they acquire post separation, including an inheritance, is not joint property and will not be included in the pool when a formal asset distribution agreement is sought. Calvin v McTier (1) however, has provided clarity on this misconception.


Background


Mr Calvin (‘the husband) and Ms McTier (‘the wife’) were married for eight years and separated in 2010. The following year they divorced and had a parenting agreement in place for their son, with equal parenting responsibilities. The husband brought most of the wealth to the relationship, however once married they both contributed as they could. Since then the husband received an inheritance from his late father in 2014, some four years after the separation. At this time there was no formal settlement between the parties and in 2015 the wife commenced a property claim against the husband. The trial judge awarded the wife 35% of the asset pool, which contained what was left of the inheritance.


The Appeal


The husband appealed the decision claiming that the trial judged should not have included the inheritance in the asset pool as it was received several years after the relationship had ended, and the wife had no connection to the property. The Full Court rejected this, as there is no requirement that there must be a connection to every asset in the pool.


In addition, they reaffirmed that the court has the discretion to determine which property will be included in the pool, and that ‘all of the property held by both of the parties or either of them can be subject of orders, regardless of when particular assets were acquired.' (2)


Significance of Calvin v McTier


This case shows that it is important to seek a binding financial agreement and property order as soon as possible after separation to protect any independent future gains, including inheritances. When making a property order, the assets of both parties at the time of trial, not at the time of separation, must be disclosed and it is the court that will decide on a which asset will be included in the asset pool for division, and which are excluded.


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References:

(1) [2017] FamCAFC 125 (2) Calvin v McTier [2017] FamCAFC 125, 24.