Many of our clients at Rayden Solicitors raise queries about inheritance. In fact, the question crops up in different contexts:
- Some wish to know how sums of money and properties inherited by themselves or their ex-partner during the course of their marriage will be treated.
- Some sadly experience the passing of a close relative after the marriage (or during divorce and financial settlement).
- Some anticipate that they or their ex-partner shall receive an inheritance in the future.
It is natural to think of our inheritances as gifts to us. That said, there is no hard and fast answer to the treatment of inheritances in divorces, which are invariably considered subject to the context of the principles of financial settlement.
In a nutshell, the treatment of inheritances largely depends on whether they are considered matrimonial or non-matrimonial assets. Matrimonial assets are those which have been built up during a marriage. They always include the shared matrimonial home, as well as financial assets that have been acquired, cultivated or used during the marriage.
Non-matrimonial assets are, broadly speaking, those which have been acquired by one party outside of the marriage and have not been “mixed” with marital assets.
Inheritances which have been kept separate often take a non-matrimonial nature. It is recognised that a party should be able to keep assets brought into, gifted or inherited by themselves alone during a marriage, particularly if they are kept separately. The court is reluctant to “invade” these assets unless doing so is necessary to meet the reasonable needs of the other party.
However, suppose the inheritance is required to meet the needs of the parties and the children involved. In that case, the court may consider inheritances an available resource to one party which influences how properly “matrimonial” assets should be divided.
Applying the above principles, and given the possible significant impact that an inheritance can have on financial settlement, certain practical concerns are frequently raised about how inheritances are treated in divorce.
Can my former partner benefit from my inheritance after divorce?
Put simply, no. In most cases, former partners cannot benefit from inheritances received by their former spouse after divorce. The inheritance is simply not received during the marriage, not used for joint endeavour, and as a default position, is non-matrimonial.
An exception to the rule (as above) may sometimes occur where the inheritance takes place shortly after separation but before financial settlement. Alternatively, it may also be an exception if it is otherwise agreed or if sharing the inheritance is necessary to meet the needs of a party in the absence of enough matrimonial assets in the share “pot” to do so.
Again, the court is generally very reluctant to do this, and as a matter of practice, the preferred approach is simply to consider inheritances received after divorce an available resource to the receiver of the inheritance.
Can I protect my inheritance from my spouse after divorce?
Yes, it is possible to protect your inheritance from your spouse after a divorce. It is important to appreciate that inheritances received during the marriage may become matrimonial because of it being “mixed” into a joint investment or used to benefit both parties. This may happen, for instance, where monies are placed alongside other funds in a joint savings account or have resulted in joint purchases or investments during the marriage. It is common to see arguments as to the nature of properties that have been purchased with the proceeds of sale obtained from an inherited property.
The most practical way to protect inheritances after divorce is to pre-empt the argument by ensuring that any assets received are kept separately and not used for any joint endeavour.
Try to have a frank and open discussion with your partner about each of your expectations on how inheritances should be dealt with in the event of divorce. Some parties may agree on a pre-nuptial agreement to record the parties’ intentions as to inherited assets in the event of separation, which helps to avoid disputes at a later stage as to how they are dealt with.
What is the impact of the timing of inheritance on divorce?
Realistically, the timing of inheritance around divorce does have some impact on its treatment within the financial settlement. Where inheritance is received by the time of financial settlement negotiations or proceedings arising upon divorce, the relevant assets belong as a matter of reality to a party and form part of the balance sheet – whether considered and treated as matrimonial or non-matrimonial assets.
Where an inheritance has yet to be received during proceedings but is expected – for example, a relative has died, and the inheritance is going through probate – provided the assets to be received are identifiable, it remains possible for a court to exercise discretion and take into its consideration the impending inheritance.
However, where an inheritance is merely a remote possibility at the time of proceedings (or is unknown), the court shall not have any information on which to deal with the inheritance. The court will be mindful that intentions as to inheritance can be changed over time and that a possible inheritance can’t be quantified until death.
Expected assets might, for example, be utilised in care home fees, or a family member might disinherit a child. It is a different matter if the property has already been transferred as “early inheritance” or placed in trust with one of the parties to the marriage beneficiary.
Inheritance is a tricky topic when dealing with financial claims in divorces, and it needs to be dealt with with care and sensitivity. Our team at Rayden Solicitors can advise you if you believe that inheritances shall be relevant to your case. Don’t hesitate to get in touch with our divorce solicitors today.
