Often when couples are divorcing there are assets that have been inherited by one party that will need to considered and a decision made as to how these will be split or who will keep them. It is a common worry that as to whether inherited assets will be included in any financial settlement.
In English law when a couple separate and decide to resolve their financial arrangements, it is necessary for each person to confirm all their assets. This includes any inherited assets. Generally speaking all the assets are treated as joint assets and put into a pot for division. There is no rule that inherited assets/income are automatically excluded and can be kept by the person who inherited them. Instead it is necessary to consider the individual circumstances of the couple.
The factors that would need to be considered include:
- How much the inherited assets were valued at? The greater the value the more likely they are to be considered.
- When the assets had been inherited? If these had been inherited some time ago it more likely that they would be treated as matrimonial assets. Those acquired more recently may be able to exclude them from the pot of joint assets.
- How the inheritance was used? Was it put into the family home or set up a business? Was it left as savings? If the money has been kept separately it may be possible to argue it is not matrimonial money and should be excluded from the matrimonial pot. If it has been used jointly or to maintain a particular lifestyle it will be harder to argue that the money should be not as matrimonial money.
- How long is the marriage? The longer the marriage, the more likely such assets would be considered joint assets and be divided. If it is a short marriage, it may be easier to argue the inheritance should be ‘ring fenced’ and excluded from the negotiations.
- The needs of each person. If needs can only be met by using the inherited assets, it will be harder to argue they should not be included.
Commonly one person will seek to argue that the other is about to receive an inheritance or will benefit in the future from an inheritance. As a general rule, future inheritances will be excluded from negotiations unless they are worth a significant sum. If one person is about to inherit from someone who has recently died, it may be easier to argue that the inheritance should not be included in the matrimonial pot.
Is there anything you can do to protect an inheritance?
Consideration could be given to a pre-nuptial agreement (an agreement made prior to a marriage being entered into) or a post-nuptial agreement (an agreement made after a marriage has been entered into). Specialist advice should be sought to ensure that these will be valid.
Cartwright King has a team of family solicitors who are on hand to help with all family law matters resulting from divorce. To speak to our team please call 0808 168 5550 or email firstname.lastname@example.org.