The question as to whether property received as a part of inheritance shall be divided between the warring spouse/partner at the time off separating and settling the financial matters is of greater importance. There are different stages in which someone can said to have received the inheritance from the family e.g., prior to the commencement of the relationship, during the subsistence of the relationship; or after the break down of the relationship. The timing of receiving the inheritance is important. The inheritance received by a partner prior to the relationship or at about the time of relationship is generally treated as initial financial contribution to the relationship or the marriage. Such a contribution shall be initial contribution, part of the pool and may weigh in favour of the partner who brings in such contribution.
The inheritance received during the marriage, or the relationship requires to be distributed as per the intentions of the benefactor. In the absence of the benefactor’s intentions, the property shall be treated as a financial contribution by the partner who received it. If the benefactor’s intention was for the use of the property to the benefit of the entire family, it will most likely be regarded as a part of the joint asset pool. However, if the property was intended to be for the benefit of the named beneficiary and if the party kept it separate from other assets without mixing up, the said inheritance shall be treated as a separate from the joint asset pool. The size of the inheritance can also influence the way property interest is dealt with in the process of financial settlement. In case it is found that the size of the asset pool compared to the size of the inheritance is smaller than the inheritance and the division of asset pool in the absence of inheritance creates an inequitable division, such inheritance can be included in the asset pool and distributed amongst the parties. The inheritance received after the culmination of relationship shall not be viewed as a financial contribution to the asset pool.
Interestingly the matrimonial property pool does not straighten up at the time of separation. The court can take different approaches to work out the issue of inheritance. The inheritance can either be quarantined or it can be included in the matrimonial property pool to be divided between the parties to the marriage or relationship. In the first approach, the court can order the partner who received the inheritance to retain it while the other assets of the parties would then be divided in accordance with the parties’ contributions and future needs. In the second approach the court may include the inheritance to be a contribution made by a partner who received it however shall not reimburse that partner equivalent to the amount of inheritance; however, receive a larger percentage of the pool to reflect the contribution of inheritance in the settlement.
It is important to work out and protect the inheritance from being messed up at a later stage. The parties to the marriage can enter into a legally binding agreement in the share of a financial agreement or the consent orders. Such an agreement of consent order shall protect the inheritance of the party to the marriage or relationship to the extent of exclusivity. Also, reflection of the benefactor’s intention at the time of drawing a good estate planning in the shape of a family trust may provide a support to the asset protection and ultimate usage of the inheritance.
Finally, the principles of just and equitable division shall be considered by the court to determine if the inheritance be included in the matrimonial financial pool. There was no requirement for a nexus between any specific asset owned by one of the parties to the marriage or relationship and to the marriage. The court retains a discretion as to the approach in respect of the treatment of the property flew from inheritance.