In short: Inheritances are generally not excluded from the assets to be divided. However, the inheriting party will generally receive greater “credit” for that inheritance. Generally, the later the inheritance the greater the weight given to that inheritance on behalf of the inheriting party.
Who gets what? How inheritances are treated in family law
This is a complex and varied area of law. Whilst the Family Court has provided some general principles with respect to how the law is applied in this area, how it deals with inheritances in a marriage or de facto relationship will depend on the facts of the particular case. For many years the leading Family Court case was Bonnici’s case. Most cases since then have been a variation on the themes discussed in that case. In Bonnici’s case, a substantial payment was made to the wife effectively from the husband’s inheritance because of her contributions to the marriage, her needs as a parent and because there were very few other assets.
So, how are inheritances actually treated by the law? How are they assessed and divided in the event of separation?
The first point is that in assessing the division of property the Court must identify the legal and equitable rights and interests of each party in any property (i.e. assets) as at the date of hearing (or when the parties resolve the matter). This was codified in the 2025 amendments to the Family Law Act 1975 (section 79 for married couples and section 90SM for de facto couples).
Any inherited asset is therefore property to be identified and will form part of the “asset pool” to be divided. This will apply whether or not the assets of the estate have been distributed. The Court can delay a matter until the estate is distributed or if the inheritance can easily be quantified it can be taken into account as a right to receive property.
An inheritance received shortly before separation or even after separation must be disclosed and will be taken into account.
An important factor in the Court’s consideration of asset division is what contributions the parties have made to the assets.
Inheritances are treated as contributions made on behalf of a party to a marriage or de facto relationship. In other words, although in most cases an inheritance will form part of the assets to be divided, the inheriting party usually gets greater “credit”.
Inheritances can form a significant part of the asset pool and in some cases the bulk of the asset pool. The weight given to any inheritance therefore will have a significant impact on the division of property.
Court Considerations
The Court has a wide discretion when dealing with inheritances. The impact of the inheritance on the overall division of the property pool will depend on a number of factors including the following:
- When the inheritance was received (i.e. early or late in the relationship or marriage, including after separation)
- The size of the inheritance
- The relative size of the inheritance compared to the rest of the asset pool
- How the inheritance was used
- Whether the inheritance was kept separate
- The other contributions made by the parties
- The length of the relationship or marriage
- The relative needs of the parties
This is not an exhaustive list. As indicated every case is different and there may be other factors or a combination of these factors that may come into play.
It is important to note that the Court will generally take a holistic approach in the division of any asset pool. The contribution of a party of an inheritance will not be seen in isolation and must be balanced against contributions made by the other party to the asset pool both financial and non-financial.
Few people realise that prospective inheritances are generally irrelevant to any property proceedings. What you may receive in the future from an inheritance is not taken into account except in rare circumstances. One such circumstance might be where the Testator – the person leaving the inheritance – has lost their ability to change their will through mental infirmity. However, even in this circumstance, certain conditions must be met.
What happens when an inheritance is received late in the relationship?
Generally speaking, if an inheritance comes very late in a relationship or marriage or after separation it will be treated very differently to the rest of the asset pool and will be treated differently to an inheritance received early in the marriage. Again, this is not a hard and fast rule and will depend on all of the circumstances of the particular matter. In the fairly recent case of Stella, Justice Strum confirmed that a party cannot be regarded as contributing significantly to any inheritance received very late in the relationship or after separation.
Interestingly, in Stella’s case, the husband’s grandmother left both parties a bequest in her will. The wife had maintained a close relationship with the grandmother. Justice Strum decided that as both parties were named in the will, each was entitled to their respective inheritance as neither party had contributed to the other’s inheritance. Again, the facts of this case were unusual.
Much will also depend on whether there are substantial other assets and how much of the asset pool is as a result of the inheritance. Freeman Family Law have been involved in a number of recent cases where although the inheritance was included, the division of assets decided by the Court was heavily weighted in favour of the party that inherited. This has been in circumstances where the inheritance has formed the bulk of the asset pool.
What happens when an inheritance is received early in the relationship?
An inheritance received earlier in the relationship or marriage may still be a factor in favour of the party who inherited it but the weight given to that factor will depend on the length of the relationship or marriage and all of the other contributions that may or may not have been made by both parties. Like most aspects of Family Law this is a “grey” area. It is complex and will always depend on the particular circumstances of the case. There have been cases decided that have given early inheritances in a long marriage very little weight. In other words, if you received an inheritance early on in a marriage you may not get much credit for that in a long marriage.
Brief checklist:
- Inheritances are generally not excluded from the assets to be divided;
- Inheritances received after separation can be included if the parties have not concluded their property division (in the case of Calvin v McTier the husband received an inheritance four years after separation and that inheritance was included);
- However, the inheriting party will generally receive greater “credit” for that inheritance;
- Generally, the later the inheritance the greater the weight given to that inheritance on behalf of the inheriting party;
- Prospective inheritances are irrelevant except in limited circumstances;
- How an inheritance is divided depends on a number of interlocking factors as set out above, under “Court Considerations”.
How to protect your inheritance
Don’t delay resolving your property matter if an inheritance is imminent (this may sound calculated but you can imagine the frustration of litigants who are grieving and then required to share some of an inheritance received after separation but before their matter is resolved).
If inheritances are on the horizon then enter into a pre-nuptial or pre-cohabitation agreement (Binding Financial Agreement) to protect any future inheritance. See our article on this topic.
We at Freeman Family Law have a vast experience in financial cases and the impact of inheritances. When an inheritance is involved, advice and representation from an experienced expert is required. If any of these issues resonate with you don’t hesitate to contact us for an expert assessment of your case.
This article was written by Graeme Freeman and updated October 2026.
