Inheritance – does my husband or wife have a claim on divorce?
You may feel that an inheritance from your family should be excluded from any divorce settlement. Unfortunately, there is no automatic exclusion of inherited assets during divorce under English law.
During financial proceedings on divorce, the court will divide assets into ‘matrimonial’ and ‘non-matrimonial’ assets. Generally, property and assets acquired during the marriage are matrimonial. Inherited assets may be considered non-matrimonial. They may be dealt with differently from matrimonial assets. This depends on when the inheritance was received and how you have been dealt with during a marriage among other issues.
What if I inherited before my marriage (or civil partnership)?
Inherited assets are not always ring-fenced. This is because the court’s priority when deciding a financial settlement is to ensure that the needs of you and your husband/wife and any children are met.
If you received an inheritance prior to the marriage, the court will take into consideration the following:
1. The amount of inheritance.
2. When it was received.
3. The length of the marriage.
4. Whether the inheritance was used for the benefit of the marriage / family.
5. The financial needs of the parties.
If you and your spouse’s needs and any needs of the children cannot be met from the matrimonial assets alone, a court can include inherited assets and distribute them as needed.
An important consideration is whether you have intermingled the inheritance with other matrimonial assets. Inheritance is more likely to be seen as a matrimonial asset capable of division if it has been intermingled with family funds. For example, if you used an inheritance used towards purchase of the family home, or paid it into a joint bank account, the inheritance would be more vulnerable to attack.
Your inheritance is less likely to be considered as matrimonial if you have kept it entirely separate from the marital pot and have not used any of it for the benefit of the family. For example, this would be if you placed your inheritance in a sole bank account and any interest or income derived from the inheritance was again kept separate from family funds. Inherited assets passed down from generation to generation, are likely to be treated differently to a sum of money inherited by a parent.
What if I received my inheritance during my marriage (or civil partnership)?
The court is likely to consider the inheritance as part of the matrimonial pot if it has been received during the marriage. This is especially if the inheritance was used to support the family or the funds were intermingled as explained above.
The court is unlikely to take in to account any future inheritance you may receive, unless your relative has already died or the inheritance is imminent at the time of divorce.
If you regularly receive support from a relative or parent, you should take advice about these payments and how they impact on divorce. For those with wealthy parents, the case of AM v SS is important reading.
I have inherited during financial remedy proceedings
In financial remedy proceedings, you and your spouse owe to each other (and to the court) a duty of full, frank, clear and accurate financial disclosure. You should disclose any inheritance received and provide a copy of the Will itself and grant of probate when completing your Form E.
These documents could be requested from you at the First Directions Appointment if you don’t disclose them. Your spouse may apply for a penal notice or costs sanctions if you do not comply.
How do I protect my inheritance?
You should consider a nuptial agreement if you are due to inherit. This can be done before or during the marriage. This is important if the inheritance is a family asset that is to be passed through the generations. These could be a family estate, work of art or stamp collection.
Inheritance and divorce is complex and you should treat this article as a rough guide only. Please seek bespoke legal advice on your situation by speaking to one of our lawyers today.
This article was prepared by Raphaela Kohs, who can be reached at firstname.lastname@example.org.
You may also be interested in this article: Protecting Wealth from Family Disputes by Sonny Patel.