Property
Settlement.

How does the court treat inheritance?

In Australia, inheritance is not automatically treated as “joint property” when couples separate. Whether it is included in the property pool for division depends on several factors, and the Family Court looks at each case individually.

Generally, the court asks:

• When was the inheritance received? Before, during, or after the relationship ended.

• How was it used? Was it kept separate, or used for joint expenses like buying a house, paying off a mortgage, or family holidays?

• What are the needs of both parties now? The court also considers each person’s financial and personal circumstances going forward.

Before or early in the relationship

If an inheritance was received before the relationship started, or very early on, it is usually treated as an initial contribution by the person who received it. This can weigh in their favour when the court works out a fair division of assets.

During the relationship

If inheritance is received during the relationship and spent on family purposes (like buying a home), it often becomes part of the shared property pool. If it is kept separate (for example, in a personal account), it may still be recognised as a contribution by the person who received it, but the other partner’s needs are still taken into account.

After separation

An inheritance received after separation is generally not included in the joint asset pool. However, the court may still consider it when assessing each party’s financial resources. This can influence how the rest of the property pool is divided.

The balancing act

The Family Court’s goal is fairness. Inheritance is just one factor. The court balances contributions (what each person brought in or earned) with future needs (like caring for children, earning capacity, and health).

Example

Jane received $200,000 from her parents during her marriage and used it to pay off the family mortgage. When she separated from her husband, the court treated this as a significant contribution by Jane. However, because her husband had lower earning capacity and would be caring for their two children, the overall property division still had to be adjusted to meet both parties’ needs.