Do you need advice about divorce and future inheritance? Perhaps the breakdown of a relationship has led to concerns that your expensive gifted assets could be shared with your spouse in the final settlement? Conversely, is your former partner expecting an inheritance that you believe you’re entitled to? Whether you want to obtain your fair share during separation or are seeking to protect your best interests, it’s crucial to understand the key features of this complex area of law.
To fully appreciate the potential outcomes, there are a number of key areas that benefit from being simplified. These include definitions of matrimonial and non-matrimonial assets, opportunities to protect inheritance, the objectives of the courts, and more. This information is intended to clarify this intricate process, and put you on a more secure footing in the future.
Understanding Matrimonial Vs Non-Matrimonial Assets
During divorce in England and Wales, the courts’ primary concerns will be the fair division of assets. This will require talking about everything the couple owns, including properties, savings, investments, pensions, business interests, etc. Alongside existing possessions, discussions can also include future anticipated assets, such as distribution of trusts, with future inheritance under a will being a common feature.
However, all assets will need to be classed as either matrimonial or non-matrimonial in order to determine whether they’re included in the ‘shared’ marital pot. If you’re concerned about the implications for divorce and future inheritance, it may be useful to further define matrimonial and non-matrimonial assets.
Matrimonial Assets
Any assets built up over the course of a marriage, often jointly, are classed as being matrimonial. These include any equity relating to the family home, pensions, and any increases in value of business. When the courts are working towards a fair split, it’s less relevant if one party has contributed more towards financial gains than the other, as the division of assets transcends antiquated terms like ‘breadwinner’ and ‘homemaker’.
Instead, both are viewed as having made different — but equal — contributions, meaning the matrimonial assets should ideally be shared equally, regardless of who fulfilled what role within the relationship. This assumes that everybody’s needs can be taken care of.
Non-Matrimonial Assets
Non-matrimonial assets generally could be thought to be anything that was not the result of joint endeavour between spouses. These might include significant wealth that one party brought to the relationship before it started. They can also encompass third party gifts, inheritance received during the course of the marriage, and financial windfalls from post-separation investments.
While this type of asset might sometimes be ring fenced, much will depend upon whether there is enough capital in matrimonial assets alone for both parties’ needs to be comfortably taken care of after divorce.
However, it must be stressed that the definition of matrimonial and non matrimonial assets is fluid in its very nature. Hence, why there can be significant litigation to determine how a matrimonial pot should be divided.
What Could Happen With Divorce and Future Inheritance?
The subject of future inheritance and divorce might sometimes appear ambiguous to someone going through a separation or civil partnership dissolution. Because so much depends upon personal specifics, there isn’t always a conclusive answer to the question, ‘Is inheritance part of divorce settlement?’. In reality, there are various permutations, and only advice from a legal professional is likely to fully explain your options.
What Does the Law Say?
As per Section 25(2)(a) of the Matrimonial Causes Act (MCA) 1973, the court may choose to explore ‘…other financial resources which each of the parties to the marriage has, or is likely to have, in the foreseeable future’. In short, inheritance is not regarded as being exempt from the matrimonial pot when considering finances after separation. Although its inclusion might be rare, it can be included, especially if the current marital pot is insufficient, and only the addition of the expected inheritance could provide enough funds to meet the ongoing financial needs of both spouses.
Sometimes, whilst the court does not directly include the inheritance as a divisible asset, it can consider it as a resource that will be available to one of the parties.
Could Timing Affect Your Case?
If any inheritance has been received throughout the course of a marriage, then, if it has intermingled with matrimonial finances, it is highly likely that if needs require the court will divide this as part of the matrimonial pot. If, however, an inheritance has literally just been received, or is anticipated following a relative’s death, right at the end of the marriage it is easier if needs allow, to argue that it should be ring fenced.
Can a Spouse Make a Claim Post-Divorce?
In short, yes, it is possible, in limited circumstances, for a former spouse to make a claim on your inheritance even after divorce, if financial claims have not been tied up in the form of a Consent Order.
Future Inheritance of Property and Divorce Explained
Entitlement to property is typically one of the biggest areas of conflict regarding future inheritance and divorce. If you are expecting to come into ownership of a home after separation, you might assume that it will be solely yours. However, the broader financial picture will be crucial in determining whether it ends up being viewed as a matrimonial asset.
As always, the courts will consider what both parties need in order to live comfortably in the years to come. This means that, if future inheritance and divorce will lead to a dramatic imbalance post-separation, there could well be a desire to level the playing field in the short-term. As an example of this in practice, it could be that the inheriting spouse sacrifices a much bigger proportion of current savings to cover the imminent acquisition of a property.
To ensure that both spouses know exactly what they’re entitled to, your solicitor may include a clean break clause in the Consent Order. This will stop either party from making future claims, which can be a helpful way to clarify the situation and get closure.
Are There Planning Strategies That You Can Discuss With Your Private Client Adviser?
The following strategies could be discussed between legal teams and their clients:
- Keep Inheritance and Matrimonial Assets Separate: As touched upon earlier, it’s important to have a clear distinction between the shared and the personal. This means not keeping your inheritance in a joint account and not using the funds to pay for matrimonial assets such as the family home.
- Keep Records: If you can provide evidence that your inheritance has remained separate from joint funds, this could give your family lawyer the best chance of proving that it hasn’t mingled with shared funds.
- Undertake Meticulous Estate Planning: Consider the likelihood of what would happen during divorce when discussing your estate plans with a legal professional. Explain your priorities to ensure that you are afforded layers of legal protection if the worst were to happen.
- Obtain Legal Advice: Every relationship is different, which means there isn’t a hard and fast rule that is applicable to divorce and future inheritance. Speaking about your circumstances with a specialist family solicitor will clarify your options and strategies for the rest of the divorce process.
- Consider Nuptial Agreements: Although nuptial agreements are not strictly legally-recognised in England and Wales, the courts increasingly refer to them when considering the division of assets. These can come in two forms; pre-nuptials being agreed before marriage and post-nuptials being agreed when the marriage has begun. As long as both parties enter into them without coercion, and nothing important is concealed, this is possibly your best option for clearly defining who is entitled to what if the relationship should end.
Future Inheritance and Divorce: 4 FAQs
For anyone who is concerned about the implications of future inheritance and divorce, it’s understandable to have urgent questions. Here are some of the most common ones to help you understand your situation:
- Could Future Inheritance Affect Maintenance Payments? Yes, any significant asset could be regarded as a factor in the overall financial picture. If the windfall is expected to be significant, it could have an impact on maintenance payments.
- Would Remarriage Affect Future Inheritance and Divorce? Yes it can, as it might impact on any previous agreements made in relation to your existing heirs. If an existing will isn’t updated in a timely manner, your new spouse could inherit elements of your estate that might have been earmarked for children of a past relationship. Understandably, this often proves to be highly contentious.
- Can an Inherited Trust Be Divided in Divorce? The courts will scrutinise the purpose of a trust in divorce, with the intention of determining whether one was set up purely to avoid asset division. If it is deemed to be a ‘sham’, it may be classed as matrimonial and be divided among spouses.
Do I Need a Solicitor to Help With Divorce and Future Inheritance? Although you are not legally obligated to enlist a solicitor, it is strongly recommended. Obtaining reliable legal advice tailored to your circumstances could ensure that you fully understand your options and reach a much more beneficial, timely outcome.
Lowry Legal: An Authority in Divorce and Future Inheritance
Are you concerned about the implications of future inheritance and divorce? Whether you’re looking to protect your future finances with a nuptial agreement or are seeking advice about your separation, the importance of reliable legal guidance is paramount. Ultimately, obtaining trustworthy advice at the earliest opportunity can give you the best possible chance of securing a positive outcome.
A well-regarded member of the prestigious Legal 500, Lowry Legal has a wealth of experience across the whole spectrum of family law. Our background in high net worth relationships, has led to us helping entrepreneurs and public figures to protect their wealth and secure their goals, leaving us perfectly placed to assist with even the most complex family matters.
Divorce is often a complex journey that can be emotionally demanding. That’s why we offer sensitive guidance and prioritise a more collaborative approach where realistic. However, our main focus is always on getting results, so we’ll do whatever it takes to simplify your options and achieve your goals.
To take your first step towards the peace of mind that only a leading family lawyer can provide, contact our skilled team today.
