Quite often, in the event of a property dispute involving spouses or de facto partners, following the breakdown of a marriage or relationship, lawyers are engaged to give advice as to whether a potential inheritance, say from an ageing parent, would be taken into account in a family property dispute or settlement.
Until recently, it was expected that very limited set of circumstances would be required for any adjustment to be made in favour of a party as against an anticipated inheritance of the other. That is, when the person who made Will has lost capacity, there is a clearly identifiable estate value, and that estate is anticipated to come into the hands of the recipient in a fairly well defined time.
White and Tulloch v White (1995)
In the decision of White and Tulloch v White (1995) the husband issued a subpoena seeking the production of the wife’s mother’s Will and documents detailing her financial position. The wife’s mother was 81 years old and in reasonable health. The wife had a sibling, who effectively was also expecting a share of the inheritance. The husband argued that an anticipated inheritance to be received by the wife should be treated as a financial resource in the determination of their own property settlement. Therefore, he argued the wife’s mother’s Will and her financial position were relevant to the property proceedings. On appeal, the Full Court rejected the proposition that the prospective inheritance was a financial resource in the case. As the mother was in good health
Therefore, he argued the wife’s mother’s Will and her financial position were relevant to the property proceedings. On appeal, the Full Court rejected the proposition that the prospective inheritance was a financial resource in the case. As the mother was in good health with full capacity, she still had the right to make a fresh Will, in which she could choose to benefit other persons or institutions, and possibly not her two children. Further, the mother may have required expensive medical care and treatment, which may well diminish her current financial circumstances.
However, a number of decisions since above decision have opened the circumstances under which an inheritance can be taken into consideration.
De Angelis v De Angelis (1999)
In De Angelis v De Angelis (1999) the wife was expected to receive an inheritance from her mother and from her Aunt totalling in value close to half a million dollars, essentially being the same size as the net pool resulting from the lengthy marriage of the parties. Although the wife’s Aunt was in poor health and not in a position to make changes to her existing Will, the wife’s mother did enjoy full capacity. Over the lengthy marriage, the husband made many contributions to the wife’s family, both financially in costs of renovations and in the form of providing assistance to improve and maintain the property. The trial Judge made an adjustment in the husband’s favour of 10% of the value of the “anticipated inheritance” pool of assets when determining the adjustment. On appeal, the Full Court determined this adjustment was appropriate.
Talbott and Tallbot v Anor (2014)
More recently in Talbott and Talbott and Anor (2014), the Family Court considered a lengthy relationship during which both the husband and wife received financial contributions in the form of inheritances. The net pool, including the properties received by inheritance, was close to $1.5 million dollars. The wife had an expectation of receiving an inheritance from the estate of a long term friend who was recently deceased. The deceased friend was engaged in property settlement proceedings in the Federal Circuit Court and therefore the quantum of the estate was at that time unknown. The evidence established that the wife may receive property valued between $200,000 and $500,000. In addition, the wife would also inherit property from her mother at some stage in the future. There is no evidence before the Court to establish the likely amount of the inheritance or the time frame in which it may be received. When making a determination as to the adjustments that are appropriate, the Judge considered the decisions in White and Tulloch v White and De Angelis v De Angelis and made an adjustment in favour of the husband of 1.5% of the existing net pool, which was deemed to be appropriate given the wife’s potentially superior financial position.
When providing advice in relation to the issue of whether an inheritance is a contribution, there is no “correct” method of determining how the Court will treat those assets. What is clear is the importance of the evidence – from the intentions of the Testator, to the value of the assets, to how they were used and the web of either contributions that may be relevant. The framework for consideration of any anticipated inheritance should include the following:-
- The value of the anticipated inheritance;
- The age and state of health of the Testator, including the capacity to change their Will:
- Timeframe in which the recipient may inherit;
- The potential for any challenges upon the estate;
- Any history of the parties’ care of the Testator; and
- Any history of the parties’ contributions to the assets of the Testator, whether financial or non-financial.