What happens to my inheritance following my divorce?

Generally when discussing the divorce settlement all assets of the marriage are pooled and treated as joint assets. A situation may arise where one partner has received an inheritance which they have used for family purposes (eg to provide a deposit for the house purchase) and the other partner hasn’t yet received an inheritance but is expecting one in the future.

The question then arises, should the inheritance that’s been received be ring-fenced (i.e. excluded from the joint assets) or alternatively should the future inheritance be included.

There is no one single answer, since it depends on the individual circumstances. Particularly, the size of the inheritance, when it was received, what it has been used for, and the financial needs of both parties and any children.

Where total joint assets are limited (i.e. there are not enough funds to meet the housing needs of both parties) the court applies a needs based approach. As such it is likely the inheritance will be treated as matrimonial property, and split according to needs. The priority will be to ensure each party’s needs are met, and the first priority being the children. For that reason the inheritance will need to be treated as a joint matrimonial asset since all available money will be required to provide accommodation for the parties and for the children. If the only way to meet the needs of the parties and children is to share the inherited assets, the Court may do this.

If the inheritance was received before the marriage or very close to the marriage breakdown, the Court will take this into account.  Where the joint funds are more than sufficient to meet the parties’ needs without including the inheritance, it may be possible to ring fence the inheritance and exclude it as a matrimonial asset.

If there is enough money for the needs of both parties and any children, it may be possible to exclude the inheritance from the joint assets. In particular, the court will look at whether the inherited assets were ever used by the family as a whole, or whether they were kept separate from the main matrimonial assets. If they were kept separate, the court is more likely to allot them back to the party who inherited them in the first place, as long as this will not lead to hardship for the other party.

Usually future inheritances are not taken into account when dealing with the financial aspects. Where the inheritance has not yet been received, the timing and value will be unknown. There’s also the uncertainty that if care fees may need to be paid in the future the inheritance could be reduced significantly. However a future inheritance could be included if the funds are expected in the near future. It’s possible for the Courts to adjourn proceedings until the inheritance is received.

The issue of inheritance and divorce is complicated and should be discussed with your solicitor. If you would like a recommendation to a solicitor please contact me on 01932 698150 or email mary@marywaring.co.uk

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