What happens to an inheritance in a family law settlement?

One of the most common questions I am asked when giving advice in family law matters is in circumstances where one spouse has received an inheritance from a parent, friend, or family member: “Is my spouse entitled to take half of my inheritance? 

Does an Inheritance form part of your relationship assets? 

In almost all cases an inheritance will be included in the matrimonial asset pool, but that does not mean that your spouse will automatically receive half of it.

Most parties bemoan the fact that their spouse could benefit from an inheritance made to them by their family, particularly when both of the spouse’s parents are still alive and elderly and the spouse is likely to inherit from his parents in the near future.

However, it is not as straight forward as splitting the inheritance down the middle.   Inheritances tend to be treated differently as part of the asset pool, depending on when and how they were received and the difference that they make to the asset pool at the end of the relationship.

Who received the Inheritance? 

In most cases, the beneficiary of the inheritance is the family member of the deceased.  However, in some cases, the deceased may have left an asset to both parties in their will.  In circumstances where the deceased benefited both spouses equally under his or her will, the divisible pool of assets will include the inheritance as an equal contribution from them both.

If the will leaves benefit of the asset to their immediate family member only, then the contribution will be seen to have come only from that family member.

The proportion of the contribution allocated to the inheritance will depend on many factors, such as how long the relationship was, what was done with the inheritance and the proportion of the inheritance when compared with the asset pool as a whole.

What was your spouse’s relationship to the deceased?

Even if the deceased left the asset to you alone, did your spouse care for the deceased prior to the relationship, or did the deceased have the benefit of living in your jointly owned home?  If the answer is yes, then the Court may allocate a large proportion of the contribution of the inheritance to your spouse, even if he or she did not benefit under the will, as they will be deemed to have contributed to the deceased’s life.

What did you do with the inheritance?

If the inheritance is substantial and applied to the reduction of mortgage or a large debt or it is used to purchase an asset which still has significant value in the asset pool at the end of the relationship, there will likely be a percentage adjustment in favour of the beneficiary, as the Court recognises that without the inheritance, the asset pool would have been much smaller.

However, if the inheritance was spent on day-to-day expenses or on a holiday and the receipt of the inheritance makes little difference to the state of the asset pool at the end of the relationship, then the Court will make little or no adjustment to the contributor.

How long was the relationship and when was the inheritance received

The court very rarely quarantines an inheritance unless it was received many years after separation or divorce (if a property settlement has not taken place) or if the relationship was very short.

The court will also give less weight to the contribution of an inheritance received in a very long relationship, then it would to an inheritance received in a very short relationship, as the other spouse would have had the opportunity to contribute to relationship in many other ways in a long relationship (including non-financial contributions such as childcare).

Inheritances received either before or in the early stages of the relationship will be considered initial financial contributions to the relationship or marriage by the person bringing the asset in.

If you have received an inheritance towards the end of the relationship, but before you have formalised your property settlement, the inheritance will still likely be taken into account in your property settlement.

When it comes to an inheritance received after the divorce has been finalised, it will likely be excluded from the pool of assets divided between both parties. This is because the Court often finds that the opportunity to contribute the inheritance towards the relationship has diminished.

How much difference does the inheritance make to the asset pool

The weight attributed to the contribution of an inheritance would also depend on the proportion of the inheritance when compared with the asset pool as a whole.  

For example, if the $1,000,000 asset pool was made up mostly of a $900,000 inheritance received by one of the parties, the Court will give a much higher weight to that contribution, that it would to $50,000 inheritance applied to a $1,000,000 asset pool, which would not attract a large adjustment.

Above are a few of the factors that the Court may consider when deciding how to handle a party’s inheritance in a divorce settlement. However, it is important to note that every case is different and often consists of many unique factors that may be considered. 

Safeguarding Inheritances 

Although it can be difficult for a spouse to propose entering into a binding financial agreement to protect any assets that they have brought into the relationship or which are inherited, it is often a cost effective and safe way of safeguarding that any inheritances received remain an asset of the beneficiary.

Next steps

If you need advice on your separation entitlements and are concerned about how to best protect your assets, Aberdeen Lawyers can help.

Arrange a ½ hour free legal advice appointment by calling us today on (03) 8390 7007 or by filling in the Contact Us form.

At Aberdeen Lawyers – everything matters

Can I afford it?

We appreciate that Wills & Probate cases can take a while to resolve. The costs can escalate unexpectedly, which is why at the commencement of a case, we provide you with the likely estimate of costs and guide you on your best way of minimising these costs.


Read about our client’s experiences.

We focus on working together with our clients, so that the result is one we are both happy with.

Great lawyers, highly recommended
Vjollca Dervishi
Vjollca Dervishi
When I first visited Aberdeen Lawyers I was scared and emotional, as soon as I met with Suzanne all my fears went away, she has this kind of magic to her that I can not explain. I can not whole heartdly recommend Suzanne at Aberdeen Lawyers enough! Suzanne made me feel like I was speaking to a good friend she made me feel welcomed and justified all my feelings, I was with Suzanne in my matter for a year and honestly she has become like family now. At every point in my case Suzanne walked me through it she made me laugh when I wanted to just cry. I have not met a most caring lawyer in my life and I've been through quite a few. I owe Suzanne my life. Thank you Aberdeen Lawyers- special mention to AnnMarie who went above and beyond for me also!
Paul Kelly
Paul Kelly
Easy relationship with our conveyancers as we were first time property sellers. All calls were returned in a timely manner, and settlement was made easy for us!
Sally Mannix
Sally Mannix
I first went to see Suzanne more than 3 years ago for what should have been a straight forward property settlement. I had no idea at that time just how complicated things were going to get. While I was having a lot of emotional breakdowns, Suzanne always remained calm and dealt with each new issue as they came up. While Suzanne was always professional, she was also very caring and empathetic at the same time. Her “can do” attitude and determination to do her absolute best for her client really stood out from that very first appointment. Suzanne and Vittoria were always available for a “calming” chat and, I can tell you, I needed plenty of them. Andre was very helpful and professional in dealing with another part of my property settlement, also having to deal with issues but able to get things done. I know that the reason I still have my home (with no more fear of ever losing it) is 100% due to Suzanne and her wonderful team. A big heartfelt thank you to you all, you are amazing! I would recommend Aberdeen lawyers to anyone, and I have!!!
Collette Marshall
Collette Marshall
I Consulted with Emmanuel Kefalas for my Divorce & Property Settlement. Kind, Considerate & Knowledgeable with Family Law matters. Emmanuel has a soft tone and was compassionate which made a big difference to my mental state at the time. I appreciated that he wrapped up the settlement as soon the opportunity emerged, no delays ! Thank you. I highly recommend a consultation with Aberdeen Lawyers
Jayne Cassar
Jayne Cassar
Suzanne and the team at Aberdeen Lawyers were supportive, professional, reassuring and compassionate throughout my recent emotionally stressful case. I was guided through every step of the legal process. They were by my side the whole way through. I highly recommend Aberdeen Lawyers. Thankyou Suzanne for your guidance and support.
Rebecca Shill
Rebecca Shill
Thank you to Suzanne and AnnMarie from Aberdeen Lawyers for all their hard work on my Family Court Matter. You were very professional and knowledgeable when it come to Family Law. I appreciate all the support you have given myself.
walter fiedler
walter fiedler
I highly recommend Aberdeen Lawyers, as they helped me settle a long and ongoing property dispute with a very good outcome in my favour and I could not be happier. Big thanks to Val and Suzanne
Vasanthi Christina Jayasingh Lazarus
Vasanthi Christina Jayasingh Lazarus
I went through a very difficult (to say the least) and traumatic children custody court case for 2 years. Emmanuel from Aberdeen lawyers was referred by one of my friend, who was going through his own case at the time. He too had only great things to testify about this law firm. Right from the time I made an appointment for the initial consultation, starting from Vittoria, in the reception, everyone in the law firm were very warm and empathetic. Emmanuel is a very genuine lawyer, who listens and wants the best outcome for his clients. He makes time whenever needed and is always available to discuss any aspect of the case, however small it maybe. He is always reachable and returns calls and emails promptly. The one thing that really stood out for me about him was that he never once during the whole process made any claims or promises to just make it look good or easy. I’m really grateful to him for getting us across the line with a positive outcome. He took me through every step of the process patiently and provided the much needed moral support I needed to get out of the traumatic experience. I would highly recommend Emmanuel and Aberdeen lawyers for their professionalism!!!

Request a callback