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Impact of future inheritances on a property settlement

Impact Of Future Inheritances On A Property Settlement

Sometimes in property settlements the issue will arise that one party is likely to receive a future inheritance.

Should that make a difference to the property settlement?

The first thing to say is that it does not affect the pool of assets to be divided between the parties i.e. the prospect of a future inheritance is not property.

The next issue is does the possibility of a future inheritance impact on the percentage division of the property?

This issue was considered by the Full Court of the Family Court in the 1995 case of White and Tulloch v White.

In this case the husband served a subpoena seeking the wife’s mother to produce her current will, past wills and documents relating to her financial circumstances. The wife and her mother sought that the subpoena be set aside.

The trial judge decided that the material was capable of being relevant and directed production of the documents. The Full Court did not overturn the decision requiring the wife’s mother to produce her current will (although it did suggest that most cases should not proceed this way). It did, however, decide that the wife’s mother was not required to produce her past wills and documents relating to her financial circumstances. It went on to say:

  • The primary emphasis in property proceedings is on the property of the parties.
  • An expectancy of inheritance won’t be relevant in many property cases but it could be relevant in some cases. This will depend on the facts of the case.
  • Matters relevant will include:
    • the testator’s age
    • the testator’s state of health
    • the testator’s financial position
    • the testator’s capacity to change their will
    • “some general assessment of the suggested inheritance expectancy”

In 1999 the Full Court of the Family Court decided the case of De Angelis & De Angelis.

In this case the wife had an expectation of inheriting both her mother’s property and her aunt’s property.

In her will the wife’s 83 year old mother left her estate to the wife. The evidence was that it was unlikely that the will would be changed.

In her will the wife’s aunt (about 90 years old) left her estate to the wife. She lacked the capacity to change her will.

The Court made an adjustment of 10% in the husband’s favour on account of the wife’s anticipated inheritances from her mother and aunt.

In most cases a future inheritance won’t be relevant to the division of property. In some cases, however, it will be a factor to take into account in the division.

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