Prospective Inheritance in Property Settlements Prospective Inheritance in Property Settlements

Prospective Inheritance in Property Settlements

16 January 2014 | General
The issue of if and how a court may take an expected inheritance into account in property settlements between couples has long been controversial.

Sometimes the parent or relative of one of the spouses has made a provision for an entitlement in their will but that parent is not deceased. In such situations, courts have been reluctant to consider a person’s expectation to inherit under a will as a financial resource in the couple’s property settlement.

This is because it is generally considered a mere expectancy, that is, an expression of the will maker’s intention from time to time which may be freely revoked at any time prior to death.

However, the courts have acknowledged that there are cases where it is “just and equitable” that a prospective inheritance be taken into account in determining each spouse’s percentage entitlement of the existing property in the context of their “future needs”.

There is no absolute rule regarding when or how the court should do this and cases such as White v Tullock and In the Marriage of De Angelis have demonstrated that it will vary in each individual case.

The court may consider the following questions when looking at each case:
  1. What is the likelihood that the party will receive the inheritance expected? If the will maker has lost the capacity to alter their will, the court is more likely to make an adjustment, though an examination of their health status may be required. Additionally, if the person expecting to inherit is the sole beneficiary (rather than one of a number of potential beneficiaries) then this may mean the courts are more likely to take the expected inheritance into account.
  2. When is the inheritance expected? If the testator is close to death then it may appear more likely that the spouse will inherit in the near future, whereas if they are in good health then the inheritance is less likely to be considered as a factor relevant to the couples “future needs”;
  3. What is the size of the inheritance relative to the asset pool of the parties? Where the court cannot properly compensate the non-beneficiary party out of the property pool the court may be more likely to consider a prospective inheritance; and
  4. Did either of the parties to the marriage contribute to the inheritance?
In summary, the court will not make a percentage adjustment in all cases where an inheritance is expected. The court is more likely to take it into account where it is more than “merely likely” that the spouse will receive the inheritance and the timing of when it will have a significant impact on the parties’ financial situation.

Property settlements can be a confusing process for many people. Our team of Family Lawyers can guide you through the process. Contact us today to find out more.
Liz Langford-Ely

Liz Langford-Ely

Senior Associate