What happens to inherited property in a divorce?
Ordinarily, matrimonial assets (assets acquired throughout a marriage or civil partnership) are considered by the court as part of the matrimonial pot and are generally divided equally.
Parties may have a less strong claim to share in non-matrimonial assets. These are assets acquired outside of the marriage or civil partnership and do not automatically fall within the matrimonial pot.
Non-matrimonial property can be:
- Pre-acquired or brought into the marriage by one of the parties
- Brought into the marriage from an external source such as inheritance or a gift
A distinction was made between matrimonial and non-matrimonial assets in the case of White v White  UKHL 54.
Decisions about financial settlement and how the court deals with non-matrimonial assets are often very fact-specific.
Unlike in other jurisdictions, inherited assets are not automatically excluded from the matrimonial pot and, therefore, may be included in the divorce settlement.
Can my spouse benefit from my inheritance?
Assets can transition from being non-matrimonial assets to matrimonial assets.
Upon your divorce, you may wish to argue that your inheritance is a non-matrimonial asset and, therefore, should not fall within the matrimonial pot.
If the inheritance was acquired prior to the marriage or civil partnership, then the other party in the divorce proceedings may claim an entitlement to it.
Particularly if, throughout the marriage, they benefitted from this inheritance, and it was held in a joint account.
Conversely, where the inheritance was received following the breakdown of the marriage or during a short marriage, it is less likely to be included in the matrimonial pot and, therefore, the divorce settlement.
The approach of the court is to distribute inherited assets as any other financial resource where the parties' and children's needs cannot be met without recourse to it.
If there are sufficient assets to provide for both parties' reasonable needs, then generally, the inherited property can be kept by the individual who inherited it.
If the matrimonial assets are insufficient to provide for both parties' reasonable needs, then the court can take into consideration non-matrimonial assets, which can include inheritance.
In the case of a need, the fact that some of the assets are non-matrimonial property is unlikely to carry much weight.
Is my spouse entitled to my future iheritance?
Section 25(2)(a) of the Matrimonial Causes Act (MCA) 1973 outlines that the court may have regard to '...other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future'.
Accordingly, if a party is expecting an inheritance in the future, the court may consider this.
However, to date, the courts have not shown much willingness to attach weight to a potential inheritance given the uncertainty of the inheritance (HRH Tessy Princess of Luxemburg v HRH Louis Prince of Luxemberg and Anor  EWFC 77,  1 FLR 1203).
Only in very rare circumstances may the court adjourn the divorce proceedings until the inheritance has been received.
What if my former spouse inherits following a divorce?
If the financial settlement provides for a 'clean break' a former spouse will be unable to make a claim against the other spouse's estate on their death.
Conversely, if the divorce settlement provides for continuing spousal maintenance, then their ability to claim may be retained.
How can I protect inherited assets on divorce?
If you want to protect your assets on divorce, we recommend having a pre-nuptial agreement drawn up or a post-nuptial agreement if you are already married.
Although not strictly legally binding in England and Wales, the court will consider these agreements when deciding how to divide your assets on divorce.
Both options allow non-matrimonial assets such as inheritance to be ring-fenced.
As per the landmark case of Radmacher (formerly Granatino) v Granatino  UKSC 42, the courts set out that such agreements are to be afforded appropriate weight, provided certain conditions are met, including that both parties seek independent specialist legal advice.
Alternatively, creating a trust over non-matrimonial assets is an alternative method to protect inheritance.
In a legal trust, a third party is provided with formal control over certain assets on behalf of their owner for a limited duration of time.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.