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How Can I Protect My Inheritance After Divorce?

If you are considering, or in the process of getting a divorce, it is important to bear in mind that assets from your current or future inheritance could be impacted. During financial proceedings, the Court Read more...

Raphaela Kohs

Solicitor

  • Divorce
  • Financial remedies
  • Children Act cases

If you are considering, or in the process of getting a divorce, it is important to bear in mind that assets from your current or future inheritance could be impacted.

During financial proceedings, the Court will divide assets into “matrimonial” and “non-matrimonial” pots. The starting point is that all assets acquired during the marriage will fall into the “matrimonial pot” and divided equally between the parties; this is known as the ‘sharing principle’.

Inherited assets from either party may be considered as non-matrimonial and may be dealt with differently from matrimonial assets and ring-fenced from the matrimonial pot. However, this is dependent on the facts of each case and on two key factors:

  1. The needs of the parties; and
  2. How the parties dealt with the asset when received.

What If I Received My Inheritance Before My Marriage?

The Court’s priority when determining a financial settlement is to ensure that the needs of both parties and any minor children are met.

If an inheritance is received prior to the marriage, the court will take into consideration the following:

  1. Amount of inheritance;
  2. When it was received;
  3. Length of the marriage;
  4. Whether the inheritance was used for the benefit of the marriage/family; and
  5. The financial needs of the parties.

If the parties’ needs cannot be met without recourse to the non-matrimonial assets, the inheritance received prior to marriage will be included in the matrimonial pot and the Court can distribute it accordingly to ensure that the parties’ needs are met.

If the inheritance has been combined or ‘mingled’ with the matrimonial assets, this could give rise to a claim that the inheritance is to be treated as part of the matrimonial pot; for example, this could be when any funds inherited are placed into a joint account or a pre-acquired property becomes the matrimonial home.

What If I Received My Inheritance During My Marriage?

If an inheritance has been received during the marriage, the Court is likely to consider the inheritance as part of the matrimonial pot.

What Will Happen to My Future Inheritance?

The Court protects future inheritance prospects on the basis that it is uncertain whether or not the inheritance will be received and when. Therefore, it will only be on rare occasions that future inheritance will be considered by the Courts.

What If I Inherited During Financial Remedy Proceedings?

In financial remedy proceedings the parties owe to each other (and to the Court) a duty of full, frank, clear and accurate financial disclosure. When completing the financial statement form (Form E) parties must disclose any inheritance received and provide a copy of the Will and grant of probate.

How Can I Protect My Inheritance During Marriage?

There are options available if you wish to protect your inheritance:

  1. A pre- or post-nuptial agreement can record which assets are matrimonial or non-matrimonial. Although they may subject to scrutiny during financial remedy proceedings, a judge must take a nuptial agreement into consideration, as long as they have been entered into properly and the needs of family are met;
  2. If you are due to inherit – keep your inheritance separate to the marriage and do not use it for the benefit of the marriage; or
  3. Consider placing the inheritance into a trust.

Disagreements over inheritance can cause stress and acrimony for all parties involved in a divorce, however speaking to a Family solicitor with special expertise in financial claims and remedies can substantially enhance your chances of achieving your preferred outcome.

Lawrence Stephens’ experienced Family team can provide advice on all aspects of your divorce while prioritising the best interests of you and your family.

If you have a family matter you would like to discuss, please contact a member of our team below.

If you would like to discuss any of the topics raised in the above article, please call us on +44 (0)20 7936 8888, email on enquiries@lawstep.co.uk or contact a member of the team below.