Are you concerned about divorce and future inheritance rights? This is perfectly natural, as the breakdown of a marriage often raises complex questions about valuable assets like family businesses and property. Ultimately, separation is often daunting, and the challenges only intensify when future inheritance and divorce matters meet head on.
Perhaps you’re worried that expensive gifted assets could be shared with your spouse, or that your former partner is expecting a share of an inheritance you believe is yours alone. The key question here is: “Is inheritance part of divorce settlement?” The answer depends on various legal factors, which we’ll examine here.
This guide clarifies how the courts in England and Wales handle inherited wealth — putting you on more secure legal footing to tackle whatever comes your way.
Understanding Matrimonial Vs Non-Matrimonial Assets
When courts divide assets in divorce, they classify everything as either “matrimonial” (shared during marriage) or “non-matrimonial” (separate property). This distinction directly affects how future inheritance and divorce settlements are handled.
What are Matrimonial Assets?
Matrimonial assets are built up during the marriage and typically include:
- Family home equity.
- Pensions accumulated during the marriage.
- Joint savings and investments.
Key Principle: In the pursuit of fairness, courts will always initially aim for an equal division of matrimonial assets, regardless of who earned more. Both spouses are viewed as making equal but different contributions; regardless of who earned more money and who played a bigger role in raising children.
What are Non-Matrimonial Assets?
Non-matrimonial assets are generally those predating the relationship and, thereby, not created through joint marital effort. However, their status can change over time:
- Pre-Marital Wealth: May become matrimonial if mingled with shared finances or used for joint purposes over a long marriage.
- Inheritance During Marriage: Typically remains non-matrimonial unless mixed with joint assets or used for family purposes.
- Gifts from Third Parties: Usually non-matrimonial, again unless integrated into wider family finances.
- Post-Separation Gains: Generally remain non-matrimonial
The crucial question: “Is inheritance part of divorce settlement?” The answer depends on several factors. Non-matrimonial assets like inheritance can be “ring-fenced” (kept separate), but courts may include them if:
- There aren’t enough matrimonial assets in total to meet both parties’ financial needs going forward.
- The assets have mingled with shared finances over time.
- They were used for the family’s benefit during a long marriage.
Bottom line: Whether future inheritance and divorce settlements intersect depends on factors like timing, asset values, and both parties’ financial needs. These definitions are very fluid, which is why inheritance cases often require complex legal analysis and support to get a fair settlement.
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 automatically 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 the funds to meet both spouses’ financial needs.
Sometimes, even if the court does not directly include the inheritance as a divisible asset, it can still be considered a financial resource that will be available to one of the parties.
Could Timing Affect Your Case?
Yes, timing is absolutely crucial when determining if future inheritance and divorce settlements will intersect.
Inheritance Received During Marriage: If you received an inheritance years ago and it’s been mixed with joint finances (like using it for the family home or shared investments), courts will likely treat it as part of the matrimonial pot, meaning it’s to be divided.
Recent/Expected Inheritance: If you’ve just received an inheritance — or are expecting one due to a relative’s recent passing — it’s much easier to argue this should be “ring-fenced” (kept separate) rather than shared.
Key Takeaway: The longer inheritance has been part of your married financial life, the harder it becomes to protect. When considering “Is inheritance part of divorce settlement?” – timing and how the money was used are often the deciding factors.
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.
Planning Strategies to 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.
- Maintain Detailed 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.
- 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; prenuptials being agreed before marriage and postnuptials 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.
Examples of How Inheritance Can Impact Divorce Settlements
Understanding how courts handle inheritance in divorce can be challenging, as each case is unique. Below are two examples that illustrate different scenarios, highlighting the key legal principles and potential outcomes. These cases demonstrate how factors like timing, financial needs, and asset mingling can influence decisions on inheritance and divorce.
Example 1: Protecting an Anticipated Inheritance
A high-net-worth individual was set to inherit a substantial sum from a family trust. Despite divorce proceedings beginning before the inheritance was received, the court considered the inheritance as a potential financial resource. However, because the spouses had clarified the future inheritance in a fair and transparent nuptial agreement, it was successfully ring-fenced from the settlement.
Example 2: Inheritance Used for Matrimonial Purposes
A business owner inherited £500,000 from a deceased relative during the course of their marriage. The money was deposited in a shared account and over time, was used to pay off the mortgage on the family home and fund family holidays. Because the inherited income was mingled with shared assets, the court ruled that it should be treated as part of the matrimonial pot and, therefore, divided.
Frequently Asked Questions: Inheritance and Divorce
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:
Q: Could Future Inheritance Affect Maintenance Payments?
A: 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.
Q: Could Remarriage Affect Future Inheritance and Divorce?
A: 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.
Q: Can an Inherited Trust Be Divided in Divorce?
A: 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.
Q: Do I Need a Solicitor to Help With Divorce and Future Inheritance?
A: 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.
Q: How long can my ex claim my inheritance?
A: Without a Financial Consent Order, your ex-spouse can claim money from you for many years, or until they remarry. However, when it comes to future inheritance and divorce situations, your ex could make a financial claim against your future inheritance — especially if you didn’t get a financial order when originally separating.
Key Protection: The best way to prevent ongoing claims is to apply for a Financial Consent Order that includes a “clean break” clause.
Q: How do I protect my inheritance from divorce?
A: Several strategies can help protect your inheritance:
Before Marriage:
- Prenuptial Agreements: A prenuptial agreement can specify that any future inheritance remains separate property, not subject to division in a divorce. While not automatically binding in the UK, courts often strongly consider them.
- Family Trusts: Courts do not usually interfere with intergenerational trusts that pre-date marriage. These provisions, set up with good intentions rather than a desire to deny the other half a fair settlement, will not usually be considered to be part of the marital pot.
During Marriage:
- Postnuptial agreements are similar to prenups but created after marriage. ‘Postnups’ can specify that inheritance should remain a separate property.
- Keep inheritance funds separate from shared finances.
- Don’t use inheritance money for joint purchases, i.e. overseas properties or family home improvements.
- Maintain clear documentation of the inheritance’s source and separation.
Key Point: The question “Is inheritance part of divorce settlement?” often depends on whether you’ve kept the inheritance separate from matrimonial assets.
Q: Can my ex claim my inheritance when they’ve remarried?
A: Your ex-spouse may be entitled to your money after divorce. However, if and when they remarry, their right to make financial claims against you generally ends. Despite this, it’s worth noting that there are exceptions:
- If they’re claiming against your estate after your death, the claim must be made within six months of the Grant of Probate being issued.
- If there was no proper Financial Consent Order during the divorce, complications may arise.
Bottom Line: Remarriage typically ends your ex’s right to claim, but proper legal documentation during divorce is still essential.
Q: What should you not do with inheritance money?
A: To protect your inheritance from being considered part of the matrimonial pot:
Don’t:
- Mix inheritance money with joint bank accounts
- Use it to pay off joint debts or mortgages
- Invest it in jointly-owned property or assets
- Use it for family expenses or holidays
- Put it in your spouse’s name or joint accounts
Do:
- Keep inheritance in a separate account in your name only
- Maintain clear records of its source
- Avoid using it for any joint marital purposes
- Consider placing it in a trust structure, before marriage. This should mean that you cannot be accused of creating it solely to deny your ex a fair share of your assets.
The more you integrate inheritance into your married financial life, the harder it becomes to argue it should remain separate.
Q: When does the court divide an inheritance?
A: Courts will typically divide inheritance as part of the matrimonial pot when:
- Needs Require it: If there aren’t sufficient matrimonial assets to meet both parties’ reasonable needs.
- It’s Been Mingled: When inheritance has been mixed with joint finances or used for family purposes.
- Long Marriage: The longer the marriage, the more likely courts are to view all assets as being matrimonial/shared.
- Substantial Contributions: If the non-inheriting spouse contributed significantly to preserving or enhancing the inherited assets.
Timing Matters: Recent inheritance or expected inheritance at the end of marriage is sometimes easier to ring-fence than inheritance received years ago, during the early stages of marriage. However, this is not guaranteed.
Q: Is inheritance split 50/50 in divorce?
A: It will rarely be the case that any assets are divided 50/50 in a divorce. For inheritance specifically:
Non-Matrimonial Inheritance: Courts aim to keep separate an inheritance that has not been mingled with matrimonial assets.
Matrimonial Treatment: If inheritance has become part of the matrimonial pot through mingling or long marriage, it may be subject to equal division.
Needs-Based Approach: Courts consider individual circumstances – if one party has significant needs that can’t be met from matrimonial assets alone, they may award a share of inheritance.
Key Factors Affecting Division:
- Length of marriage.
- How inheritance was used during marriage.
- Both parties’ financial needs.
- Available matrimonial assets.
- Timing of inheritance receipt.
The court’s primary concern is achieving a fair outcome that meets both parties’ reasonable needs — and not equal division.
Important: Inheritance and divorce law is complex and highly fact-specific. Always seek specialist legal advice for your particular circumstances, especially when significant sums are involved.
Lowry Legal: Experts 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 in handling complex family law cases for high-net-worth individuals. Our expertise includes protecting trusts, inheritance, and international assets.
To take your first step towards financial security, contact our team today.
