When a marriage breaks down, dividing finances is rarely straightforward, especially where an inheritance is concerned. Many people believe that inherited money or property will remain theirs alone. In reality, this isn’t always the case.
Here, we explore how the family court approaches inheritance during divorce and what steps you can take to help protect it.
Does an Inheritance Count as a Matrimonial Asset?
The starting point in divorce is an outcome that achieves ‘fairness’, with the court’s primary focus being the needs of both parties. If you have children under 18, they will be the court’s ‘first consideration’.
Where there are significant resources, the family court will typically apply the ‘sharing principle’, which means dividing ‘matrimonial’ assets and leaving ‘non-matrimonial’ assets out of the equation.
Inheritance is typically considered a non-matrimonial asset. However, if those assets have been mixed with family finances or used for joint benefit, such as buying a home or paying household expenses, they may potentially become part of the wider matrimonial pot.
In more modest ‘needs’ cases, the distinction between matrimonial and non-matrimonial assets is not as relevant, and the court may make orders in respect of any asset, regardless of whether or not it is a matrimonial one.
When an Inheritance can be Ringfenced
You may have a stronger case for excluding inherited assets from division if they have been kept entirely separate. For example:
- Held in a personal bank account.
- Invested in property owned solely in your name.
- Not relied upon for family living costs or joint purchases.
But even in these cases, the court still has the discretion to include the inheritance in the division of your assets if it’s needed to meet your ex’s or your children’s needs.
Needs Come First
As above, even where an inheritance is technically “non-matrimonial”, the court may still take it into account, particularly in needs cases.
For example, if one spouse has received a large inheritance and there’s a shortfall in housing or income provision for the other, the court can consider it fair to use some or all of that inheritance to bridge the gap.
Protecting Your Inheritance in the Event of Divorce
If you’ve received or expect to receive an inheritance, there are sensible steps you can take to help safeguard it:
- Prenuptial or postnuptial agreements
These can deal with how an inheritance should be treated in the event of a divorce. While not legally binding, the family court will give weight to such agreements if both parties entered into them freely, with full understanding of their terms, and provided that they are broadly ‘fair’. Provided the agreement means the relevant criteria, it can be deemed to have ‘magnetic’ importance by a judge dealing with the case. - Keep inherited assets separate
Avoid mixing them with joint finances. For example, don’t deposit an inheritance into a shared account or use it for joint purchases unless you’re comfortable with the idea that it could become part of the matrimonial assets. - Maintain clear records
Keep documentation that shows when the inheritance was received and how it’s been used. This can be invaluable if you need to argue that it remains a non-matrimonial asset.
Every Case Is Different
The treatment of an inheritance during divorce is highly fact-specific. The court has a broad discretion, and while inherited assets may be ring-fenced, they are not automatically excluded.
At Slater Heelis, our experienced family law team can provide tailored advice on how inheritance is likely to be treated in your specific circumstances. Whether you’re looking to protect your assets or understand your entitlements, we’re here to help you navigate the process with clarity and confidence.
Speak to our family law team today on 03301 734 354 or fill out our online contact form to arrange an initial chat with one of our expert solicitors.