Divorce complicated by inheritance and bonus

Date: Feb 27, 2015

The process of separating can often be complicated when one or both parties receives a large windfall that further alters the couple's asset base. When this comes through as the couple are separating, it can make it harder to determine the correct financial settlement.

This was seen recently in a divorce case before the Family Court of Australia, in which both parties received a substantial windfall while they were going through the separation process - which further complicated the finalisation of their divorce.

In the case, one party received a substantial inheritance from her father in the months before the couple's final separation. The inheritance was then put towards a number of different uses. Part of it was put towards the couple's shared mortgage while other parts were used by the woman to support herself once she separated from her husband.

Shortly after the couple's separation, the husband also received a substantial bonus from his work, which the courts were required to judge whether it was fair to include within the pair's jointly held property.

The key consideration here was whether or not the bonus qualified as part of the husband's remuneration within this role, or whether it was earned purely by the man's own effort. If it were ruled to be the former, the wife could legitimately claim a share of this, given that she was not in full-time employment and was contributing to raising the pair's children.

The court confirmed that it was the latter, as the bonus had not formed part of the man's core wages and had been intended as a bonus for good performance in his role.

Finally, the case was complicated by the wife's wish that she retain the family home and instead the husband be compensated with a larger share of the pair's collective superannuation. This was rejected by the courts - given that superannuation cannot be converted into a liquid asset as easily as property.

In the end, the couple's joint assets were split by the courts, with a slightly higher allocation granted to the former wife. The family property was sold and the man was also required to shift a portion of his superannuation fund into his former partner's name.

Considering how complicated divorce proceedings can become, especially when both parties receive a substantial windfall during the separation process, those involved need to seek advice from a family lawyer. They can provide specialised advice and guide you through the legal requirements that come with negotiating a financial settlement.