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How is an Expectation of an Inheritance Treated?
23 September 2013
It is often the case that at one time or another a person receives an inheritance during their relationship. But what happens if that person receives the inheritance shortly before or after separation?
- a person has already received their inheritance; or
- a person has an interest in a deceased's estate even if the estate is yet to be administered;
the Court will treat that inheritance as property and a contribution by the party who received it. If treated as property, the Court will include the inheritance in the pool of property available for division and can make orders as to how it is divided.
Whilst this may appear straightforward, the difficulty is when the Will maker has not yet died.
Take for example Mrs Smith's widowed elderly father, Mr Jones who made a Will leaving everything to Mrs Smith. Assume Mr Jones is sick and owns a property portfolio worth a considerable sum. In this example if Mrs Smith and her husband separated the Court in unlikely to treat Mrs Smith's expectation of an inheritance as property because Mrs Smith has no right to stop her father from changing his Will before he dies.
On the other hand if we assume that Mr Jones had lost testamentary capacity, the Court could treat Mrs Smith's expected inheritance as a financial resource but would not treat it as property. If treated as a financial resource, the inheritance would not form part of the pool of property available for division but rather, it would be taken into account when considering the future needs of each of Mrs Smith and her husband. In other words, the person who did not receive the inheritance may be awarded a greater share of the non-inheritance pool than they ordinarily would have been entitled to receive.
Ultimately there is no rule of thumb and each case is determined on its individual circumstances. In each case the Court will consider matters including but not limited to:
- when the inheritance was received;
- when the inheritance is likely to be received;
- whether one or both people contributed in any way to the inheritance;
- the size of the inheritance in comparison to the property pool;
- each person's individual financial position.
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