Protecting your Inheritance when getting a Divorce

• Posted onNovember 27, 2020

A common question for divorcing couples is how will the court deal with inherited assets. The answer however is not black and white and can differ between a past inheritance and any future inheritances. Beth Evans Director and Head of Family Law at WSP Solicitors looks at how you can protect your inheritances when getting a divorce.

Past Inheritances

Generally speaking, on divorce all assets of the marriage are pooled and treated as joint assets and part of the “matrimonial pot”, available for distribution between the parties. Although it is often classified a “non-matrimonial asset”, money or property that one spouse has inherited is not automatically excluded from the assets that are available to be divided.

How inherited assets are treated by the court will depend on the individual circumstances of the case.

Key considerations in relation to past inheritance are:

• The size of the inheritance.
• When the inheritance was received.
• How has the inheritance been utilised during the marriage?

If inherited assets have been transferred to joint names or used for the benefit of the couple/family, they are likely to form part of the ‘pot’ of matrimonial assets available for division.

Inherited assets received shortly before or after the breakdown of the marriage are less likely to be included in the matrimonial pot of assets, although this will depend on there being sufficient other assets to meet the future needs of the couple and their children. Reasonable needs may result in some or all of the inherited assets going into the matrimonial post for distribution.

Future Inheritance Prospects

Future inheritance prospects, which are by their nature uncertain, are not usually taken into account by a court when considering a financial settlement on divorce. However, where there is an expectation of an imminent or significant inheritance, the court may take this into account and sometimes financial proceedings, or aspects of them, are adjourned until the inheritance has been received.

Protecting Inherited Assets: Marital Agreements

If you would like to try and protect an inheritance or anticipated future inheritance from forming part of the matrimonial pot should you later divorce, you can consider entering into a pre-nuptial or post-nuptial agreement with your spouse/future spouse. The purpose of these agreements is to set out how you intend financial matters to be dealt with should your separate.

Such agreements are not currently binding on the divorce courts in England and Wales, but have been regarded as persuasive and even “decisive”. In a 2010 decision the Supreme Court said: “The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.” Although a marital agreement does not guarantee the inheritance will be protected, it may increase the chances that it will be.

How can a Family Solicitor help me?

Our expert team of Family Solicitors are on hand to help you with all your family law needs, including protecting your inherited assets. You can contact the team here, alternatively you can call us on 01453 847200.