Inheritance and divorce

Inheritance is often considered a non-matrimonial asset. This is because it is usually bequeathed to one person, for example a grandparent to their grandchild, rather than to the couple together.

However, the law requires each case to be reviewed individually, and weight given to all relevant factors and circumstances affecting the separating couple. This means that in some cases, inheritance may be included in the financial settlement and divided upon divorce.

If the inheritance was gained before or during the marriage, it is more likely that it will need to be included in the matrimonial pot. This is often because the non-receiving party is likely to have benefited from the inheritance through the marriage. For example, if a large sum of inheritance money was used as a deposit on the family home and therefore intermingled in a matrimonial asset. A court will also look at whether the money or property was held in a joint account/joint names.

Distribution of inherited assets is organised on a needs basis. They will be considered as a financial resource, much like money in a joint bank account, if the needs of the individual parties and any children cannot be met without drawing on it.

If you are getting divorced and are likely to receive inheritance in the near future, this must be declared within your financial disclosure.

Within the Matrimonial Causes Act 1973, it states that the court may need to give regard to financial resources that each of the parties is likely to have in the foreseeable future.

However, given there is a strong degree of uncertainty, it is unlikely that the court will give much weight to potential future inheritance. This means that it may not be considered as part of the financial settlement.

The claim on inheritance received after divorce depends on whether you have a ‘clean break’ or not.

If your financial consent order contains a clean break clause and a dismissal of claims in respect of capital and income, any inheritance received by either party after the divorce and financial settlement are finalised cannot be claimed on.

However, if there is ongoing spousal maintenance, and income claims remains open, it may be possible for your ex to claim on inheritance even after your divorce by seeking for example capitalisation of the spousal maintenance which is a lump sum payment for the balance of the spousal maintenance.

This issue goes back to matrimonial and non-matrimonial assets. If you have separated, but are still going through divorce proceedings, or have not yet begun proceedings, it may be the case that any inheritance received is more likely to be considered non-matrimonial. This is because it was accrued outside of the marriage, and it is less likely your ex has jointly benefitted from it.

However, if during financial negotiations, reasonable needs are unable to be met by the matrimonial assets alone, the received inheritance may be considered.

If you wish to protect future or existing inheritance, the best way to do so is through a nuptial agreement. A prenup can be drawn up before your marriage, or you can get a post-nup if you are already married. It is important to have these drafted by a family lawyer.

Nuptial agreements can detail assets, including inheritance or other non-matrimonial assets, and what should happen to them should your relationship break down.

It is important to note that they are not legally enforceable. However, they can be useful in ring-fencing inheritance, particularly if it is a second marriage or there are children you wish to provide for in the event of divorce.