If you’re going through a divorce, then splitting your property and assets will be a key part of your settlement. But what about an inheritance you received? Is an inheritance spit on divorce? Does it form part of your joint assets? And what about inheritances you received before you were married or after you separated? Keep reading for our guide to inheritance and divorce.
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Are inheritances split on divorce?
If you’re not able to agree a financial settlement with your spouse on divorce, you may have to ask the court to make an order.
There is no hard and fast rule for how a court divides assets, and the Matrimonial Causes Act 1973 gives courts discretion to split assets as they decide. Courts have a lot of flexibility to make an order based on your circumstances.
In terms of dividing any inheritance one spouse has received, the court will consider factors such as:
- when the inheritance was received
- whether you have children
- the size of the inheritance
- how the inheritance has been used
- the length of your marriage.
While each case is different, and the court will consider the specific issues surrounding your case, guidelines from the Court of Appeal state that:
- Inheritances transferred into joint names or used for the benefit of your marriage are likely to form part of your ‘joint assets’ when the court divides your property on divorce
- Inheritances you receive just before the end of your marriage are less likely to be considered ‘joint assets’. This may depend on the other spouse’s financial needs following the divorce (see below)
- If you have children, inheritances can be divided if this is the only way of meeting their needs (see below).
Bear in mind that any inheritances you receive are not automatically excluded from a financial settlement on divorce. Whether you must share it depends on the specific circumstances of your case.
Are inheritances always part of our matrimonial assets?
No. Any property or assets that you acquire during the time you are married – typically pensions, property and savings – are generally considered ‘matrimonial assets’. A court will generally divide these equally.
If you bring an asset to the marriage – such as an inheritance – it can be considered a matrimonial asset and divided on divorce if this step is required to meet your family’s needs after the marriage ends (see below).
An inheritance can also be considered part of your joint assets if it was used for the benefit of the family. For example, you may have inherited some money before your marriage and then used this to buy your marital home. Here, a court may consider this money a matrimonial asset.
In other instances where the inheritance has been handed to just one spouse, the court will often seek to decide on a settlement that allows the spouse to retain that inheritance in full. This could however result in other joint assets being handed to the other spouse in order to achieve a settlement that is fair overall.
How do courts deal with inheritances on divorce?
Every case is different, and the court will look at the specific circumstances of your situation before making an order.
Factors that a court will consider when ordering a financial settlement include:
- your income
- your financial resources
- your age
- the length of the marriage
- your standard of living when married
- your respective contributions to the marriage.
An inheritance is not specifically referred to but comes under the heading of ‘resources’.
When deciding whether to include an inheritance as a matrimonial asset, the court will consider two main issues: meeting your family’s needs and ‘mingling’.
Meeting your family’s needs
The basic principle is that if the matrimonial assets you have aren’t enough to meet the needs of both spouses and any children when you divorce, then inheritances can be taken into account to meet these needs.
Courts have previously stated that inherited assets can be treated differently to matrimonial assets, but only where your future ‘needs’ can be met by your joint assets alone.
Mingling
If you have been married a long time, then it is quite possible that any inheritances you have received will have become combined with your other assets. In a 2006 case Baroness Hale stated that ‘the importance of the source of the assets will diminish over time’. Examples of where the source of any assets may diminish over time include:
- where an inheritance has been used to buy or contribute towards a marital home
- where an inheritance has been mixed with matrimonial property to the extent that it is hard to identify its current value (‘mingling’)
- where you have acquired so much matrimonial property that the significance of the inheritance is diminished.
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What about inheritances I received before I got married?
If you received an inheritance before you were married, then your spouse may still be able to make a claim on this under certain circumstances.
For example, if your inheritance was used as part of a joint account then ‘mingling’ may have occurred, and the inheritance may be considered part of your joint assets subject to the factors above.
An inheritance received before you married can also be considered part of your matrimonial assets if your spouse had benefited from it during your marriage.
It is possible that inheritances you received before you married will not be taken into account as part of your financial settlement. A 2004 case centred around a property that had been inherited by the husband, which the wife was claiming a share of after their 19-year marriage ended.
In this case, the judge commented that that the inheritance was based on a:
“…landed estate that has been in one spouse’s family for generations and which has been brought into the marriage with an expectation that it will be retained in specie for future generations”.
One way to ensure your inheritance is ring-fenced is to consider a pre-nuptial agreement or postnuptial agreement. This can help you identify the ownership of any assets you own and prevent any future claims on divorce (see below).
Do I have to split inheritances received after my marriage?
If you receive an inheritance after your marriage breaks down, then it is less likely a court will include it as part of your matrimonial assets.
As noted above, much will depend on your individual circumstances. If there are insufficient matrimonial assets to meet the family and your children’s future needs, the inheritance may be included as a matrimonial asset in order that it can be divided to meet these needs.
If your former spouse has remarried, they cannot make any claim on a future inheritance. This is because they can no longer make a financial claim against you once they have remarried.
How are future inheritances treated on divorce?
Future inheritances are normally also excluded from a financial settlement unless this is likely to make a significant difference to the settlement.
In many cases a future inheritance is simply too uncertain to consider. This is because it is difficult to predict when a person may pass away, and also because there may be uncertainty as to the exact amount of the inheritance. It is possible that someone could change their will or otherwise change the amount that a party is likely to inherit.
In some cases, the financial settlement process can be adjourned until the value of the inheritance is established. This is sometimes the case if the inheritance is expected to be significant and if the funds are expected in the near future.
Can I ring-fence an inheritance so the court doesn’t consider it?
If you have brought an inheritance to your marriage, then it is natural that you may want to consider how to protect this in the event of a divorce.
As we have seen, inheritances are generally treated differently to any other assets that you acquire during your marriage and so your spouse would normally have a weaker claim to an inheritance when your marriage ends.
The court will consider:
- the value of any inheritance
- the nature of any inheritance
- the circumstances in which an inheritance was given.
For example, the court is likely to treat the inheritance of a property that has been in your family for many generations differently to the inheritance of a cash sum.
In all cases, however, the court can insist that an inheritance is split as part of your financial settlement for the reasons outlined above.
How do I protect an inheritance against a claim by my spouse?
If you want to ensure an inheritance is kept out of any divorce settlement you can consider either a pre-nuptial or a post-nuptial agreement.
Prenups and postnups are documents that you and your spouse sign either before or during your marriage that outline what a financial settlement would be in the event of your divorce. It allows you to ring-fence any inheritances that you bring to the marriage, or that you receive while you were married.
Your pre-nuptial or post-nuptial agreement should:
- be signed by both spouses and witnesses
- be entered into after you have each received independent legal advice
- contain full financial disclosure by both parties. This includes all assets, inheritances, property and income.
While a prenup or postnup does not guarantee that you will retain your inheritance when you divorce, it will certainly help. You can use such an agreement to state what you’d like to happen to your inheritance if your marriage ends. A court will take such an agreement into consideration when making a financial order.
Another way that you can try and protect your inheritance is to keep the asset separate while you are married. If your inheritance is not being used for the benefit of the marriage or your family, it can be easier to prove that no ‘mingling’ has occurred and that your spouse has not enjoyed the benefit of this asset.
Additionally, on divorce it can be sensible to obtain a Consent Order. This legally-binding document details how all your finances will be divided after divorce, and includes savings, pensions and property.
A Consent Order will also prevent your former spouse from making a future claim against you, for example if you receive an inheritance in the future.
Do you need help with your divorce?
Get in touch now with one of our panel of specialist local family solicitors.
The information on this website is to be considered a guide and is therefore not legal advice. You use this information with the understanding that Wiselaw does not accept liability for any direct or indirect losses as a result of anyone relying on or acting upon the information on this website. Whilst we endeavour to provide accurate information, Wiselaw does not accept liability for any errors or omissions on this website.
