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What Happens To Inherited Assets in Divorce?

As a general rule, most assets which are acquired during the course of the marriage are added to the ‘matrimonial pot’ and divided equally upon divorce.

In practice, the court may decide that one party is entitled to a larger share, but a 50:50 split is the starting point. The factors considered by the court are set out in section 25 of the Matrimonial Causes Act 1973.

But any assets which have been inherited by either husband or wife are often treated differently in the context of divorce.

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The rationale behind this was set out in the case of White v. White, in which the court acknowledged the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property.

In other words, when considering the division of the matrimonial pot, inherited wealth (considered ‘non-matrimonial property’) will be treated differently to assets acquired through work, property, investment and business endeavours during the course of the marriage (called ‘matrimonial property’) in the divorce settlement.

Are inherited assets split upon divorce?

If money is inherited by either husband or wife during the marriage, whether or not it will be added to the matrimonial pot will depend upon several factors, including:

  • Passage of time – in a long marriage, where either party brings non-matrimonial property (eg money from inheritance) into the marriage, the source of these assets will become less important as time goes on and may gradually come to be seen as matrimonial property (Miller v. Miller).
  • Mingling of property – where the non-matrimonial property ends up being intermingled with matrimonial property over time so that it becomes difficult to distinguish one from the other, it is more likely that it will all be added to the matrimonial pot (K v L). An example of this could be where a portion of the inheritance is used to purchase shares as joint shareholders, which significantly increase in value over time.
  • Matrimonial home – if an inheritance is used to purchase a matrimonial home, this is more likely to be considered as having been added to the matrimonial pot and divided accordingly (K v L).

But the factors mentioned above will generally only come into play if the matrimonial assets are adequate to meet the needs of both parties (eg in terms of a financial settlement). If the matrimonial property is insufficient, then the non-matrimonial property will need to be added to the overall matrimonial pot in order to cover the financial needs of both parties following the divorce – this is especially the case where there are young children involved.

It is important to note that there are no hard and fast rules when it comes to dividing inherited assets; the outcome will always be decided on the facts of the individual circumstances.

What happens if excluding inherited assets puts one party in a much stronger financial position?

As mentioned above, the key decision for the courts will be to ensure that there is sufficient distribution of assets in any financial settlement to meet the needs of both parties.

If excluding the inherited assets of one spouse means that the other spouse is left out of pocket, then it may be necessary to add the inherited property (or a portion) to the matrimonial pot.

The ring-fencing of inherited assets away from the matrimonial pot is more likely to take place if the inherited assets have been stored separately and are not needed to meet the parties’ needs on divorce.

The level of financial settlement considered to meet the needs of both parties will differ widely on a case by case basis. If the married couple became accustomed to a certain level of affluence in terms of their lifestyle, this will generally be taken into account.

However, this does not necessarily mean that it will be considered unfair if one party is left in a much stronger financial position due to their own personal inheritance; the courts will look at ‘needs’ rather than equality of division when it comes to non-matrimonial property.

Are future inheritances considered in a divorce settlement?

In general, potential future inheritances are not taken into account when it comes to deciding a financial settlement. However, if a significant future inheritance is known about and expected, the courts may delay a decision on the final sum. 

More importantly, if one party suddenly comes into a large sum of money following the divorce (eg through an inheritance or lottery win) their ex-spouse may potentially be able to claim a portion, even many years after the divorce. One way to help prevent these types of claims is by obtaining a clean break order from the court.

Should inheritance be shared with a spouse?

Although there are many legalities regarding inheritance and divorce, many individuals will have their own opinion in regards to whether they should share it with their spouse when divorcing.

Many believe that it’s theirs to keep if it’s been passed on to them from their family member and others feel that although they’re divorcing, their spouse should receive an adequate share of their inheritance.

Many couples are able to make their own decision in regards to what they want to do with their assets in a divorce, however, if this is the case it vital that you obtain a clean break consent order.

This details what you both have chosen to do with your assets in a legally binding agreement and will also prevent any future claims being made against one another in the future.

How can I protect my inherited assets in a divorce?

One of the most asked questions we receive in regards to inheritance and divorce is how to protect an inheritance from divorce.

Any non-matrimonial property – including inherited assets – which are brought into a marriage, can be given some protection using a prenuptial or postnuptial agreement. However, neither of these methods are guaranteed to protect any assets.

Clean break consent orders should be considered to prevent future claims. It can also help to keep any inherited assets separate from any joint property, to avoid them becoming mingled.

Inheritance Examples In Court

Y –v- Y [2012]

Concerned a divorcing couple and inherited assets from the husband’s side of the family. The Court described the parties standard of living as being “exceptional” and “privileged” during their 26 years of marriage. Shortly before the marriage the husband became entitled to a large Oxford Country estate owned by his family and it was fully passed on to him four years after the marriage.

Taking into consideration the lifestyle enjoyed by the family, the judge held that it would be “reasonable and fair” for the wife to be awarded £5.1 million (inclusive of stamp duty and legal costs) for her long-term housing needs and £300,000 furnishing costs. £150,000 per annum was the budget the judge ordered to be reasonable and £17,500 per annum per child by way of periodical payment whilst the two youngest children remained dependent.

This taken into account, the judge ordered that there be an income fund for the wife of £3 million, with £293,000 for the wife’s debts and £45,000 for the wife’s car. The total amount awarded to the wife being £8,738,000.

Baron J stated: “This amount of capital represents a 32.5% share in the net assets. It leaves the Husband with 67.5% of the assets (some £18 million) which is appropriate given the origin of the wealth. The award fairly meets the Wife’s needs and it encompasses any right that she has to share the assets. I so state because, although my calculation is needs-based, it does involve sharing asset which will be invaded to cover the award. In this case needs and the right to sharing are essentially the same.” Even though this a case with considerable wealth it can show that in some circumstances the court will see the inheritance as part of the “pot”.

However, future potential inheritance is not normally considered as there is no guarantee that the beneficiary will receive the amount bequeathed to them if property value dips etc. In Robson v Robson [2010] Hughes LJ stated “That the origin of assets in inheritance is a relevant factor for the court in no sense means that the approach to inherited assets ought always to be the same. What is fair will depend on all the circumstances; those cannot exhaustively be stated but will often include the nature of the assets, the time of inheritance, the use made of them by the parties and the needs of the parties at the time of trial.”

Inheritence FAQs

Inheritance used to buy home divorce

Answer

As previously mentioned, inheritance used to buy the marital home will more likely be considered to be as having been added to the matrimonial pit to be divided between both parties accordingly.

Can my wife who I've not seen for 15 years inherit estate where there is no will

Full Question

My grandad died a few days ago, and he was separated from his wife for more than 15 years. They had no contact, no legal separation was ever done, they just split up. Now that he has passed away, I was wondering if she is still his next of kin and entitle to anything he has left behind, even though they have been separated for so long.

Answer

Unless he did a will stating that she was not going to receive anything, then she will be the sole inheritor of his estate subject to the rules of intestacy which provide for certain financial limits.

If you are married and you do not have a Will the amount your spouse can inherit is limited by the Government rules which you can find here

Will my husband get any of my mothers inheritance?

Full Question

My husband has just told me he wants a divorce. I do not want this, although I am slowly becoming resigned to the fact. I am in no hurry to get the formal paperwork completed, although in order that we can get on with our lives we both need to know where we stand financially. I am of a mind to wait 2 years before giving my consent.

The question is that my mother is 84, and though currently in good health it has to be faced that she may not last the 2 years. I am an only child and stand to inherit all her estate, although this is not considerable.

My question is will I have to give part of this to my husband if she dies before the divorce. Other than divorcing as quickly as possible, how can I or she protect any future inheritance I may have?

Answer

If you wait the two years and your mother dies during that period, any inheritance that you receive will be taken into account. What that means is that it can and probably will alter the final outcome. Without knowing anything about you, the finances, your ages, length of marriage etc its not possible to predict the outcome. However bear in mind that even if you start divorce proceedings now, it tends to take anything from say 9 months to 18 months to get everything all sorted out.

If you start in two years time , add that time on. However it is a big decision and one that should not be rushed into. If you aren’t ready to divorce yet, then don’t. Its not either now or in two years. You could get it going in six months time if you want. Its your divorce and in a way you can set the pace and timetable.

Is my father’s marriage valid?

Full Question

My Father married his girlfriend whilst he was on his deathbed (this was her idea). He has since past away. The marriage was never consummated as he was too ill (although they had lived together prior to his illness). He never made a will and now she has inherited everything including the house which we are living still living in and we believe she will sell it and move on. Is the marriage valid and do we have any rights to prevent losing our home in law ?

Answer

The marriage is valid I am afraid and the will is also valid unless you can prove that he was in fact mentally unable to make decisions of this nature.

Also there is a possibility of conntesting the will under the Inheritance Act but you have to show you were in some way maintained by him.

Is the marriage valid and do we have any rights to prevent losing our home in law ?

Full Question

My Father married his girlfriend whilst he was on his deathbed (this was her idea). He has since past away. The marriage was never consummated as he was too ill (although they had lived together prior to his illness). He never made a will and now she has inherited everything including the house which we are living still living in and we believe she will sell it and move on. Is the marriage valid and do we have any rights to prevent losing our home in law ?

Answer

The marriage is valid I am afraid and the will is also valid unless you can prove that he was in fact mentally unable to make decisions of this nature.

Also, there is a possibility of contesting the will under the Inheritance Act but you have to show you were in some way maintained by him.

I suggest you get independent legal advice.

Will I still get my maintenance when my husband dies?

Full Question

I am 66 years of age and have been divorced since 1975.

I have not re-married or been supported financially by anyone since. My ex-husband has paid me a reduced amount of maintenance of £1020 per annum ever since my children left home (ie since 1980).

He re-married in 1984. He is now 68 and is not in good health and I want to know whether, in the event of his death, I can make a claim under the Inheritance Act for financial provision out of his estate. I manage on a very low income and have to work part-time from home to make ends meet. (My total income is less than £10,000 per year) and I would really miss the £1020 maintenance receive at present. My ex-husband and his wife are very comfortably off.

Answer

If you have an order in force it may state that your claims under the Inheritance Act have been dismissed but if your order is for life then your solicitors should have insisted on this not being dismissed to allow you to continue to be maintenance from his estate

If the claim has not been dismissed then you will still be able to claim against the estate as you have been continually maintained by him. I would take your order to a family law Solicitor for review.

I would take the order to a Solicitors to check.

When the divorce is complete does the right to inheritance die with it?

Answer

 The thing is future inheritance is not part of the divorce settlement in the present however this may not stop an ex spouse making a claim in the future.

The issue of inheritance during divorce proceedings is at times uncertain as Judges have discretionary powers under s25 of the Matrimonial Cases Act 1973 and furthermore there are no specific rules pertaining to inheritance, settlements are based on individual circumstances.

If one party has already received some inheritance and then both parties look to file a divorce with a financial settlement Judges will look at assets and make a decision based on information provided and if the joint assets are low a Judge is more likely to consider inheritance in a settlement than if assets are at a reasonable level.

But what if you are potentially due for inheritance in the future? can your spouse make a claim on future assets? The answer is potentially, yes. This may seem unfair but you have to make sure any future claims are dismissed by a legally binding document called a consent order.

This post was written by Mark Keenan. Editor of Divorce Online and Managing Director of Online Legal Services Ltd. Mark has been writing about divorce and related subjects for over 20+ years and is an expert in legal marketing.

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