Can inherited property be taken into account in my divorce settlement?
Posted on 28th January 2020
A concern for many divorcing couples, particularly those who have lost one or both parents, or have elderly parents, is whether any inherited property or assets will form part of the matrimonial pot. In most cases the Court will treat assets which have been built up by the parties during the marriage differently than those which have been inherited. However, there are no set rules and each case will be decided on its own facts. This blog should hopefully provide a general overview as to the current stance of the Court.
One of the main cases in this area is that of White -v- White in which the Judge explained that inherited wealth ‘represents a contribution made by one party which is unmatched by an equivalent contribution made by the other’.
If an inheritance is received during the marriage and it has been used for the benefit of the parties / family generally, for example assisting with the purchase of the family home, or monies have been placed in a joint account, then it is likely to be classed as matrimonial property and will form part of the assets available for distribution.
If an inheritance is received towards the end of the marriage, or after separation, or inherited money has always been kept completely separate from matrimonial funds, in an account held in the sole name of the party who inherited, and not used for the benefit of the family, then there are stronger arguments that the inherited property / money should be ‘ringfenced’ which means it does not form part of the matrimonial pot.
However, the Court can determine that inherited property / money should form part of the pot if the housing or financial needs of both of the parties or the welfare of any children cannot be met, or a fair settlement cannot be achieved, without that asset being used. It is important to note that a ‘fair’ settlement does not necessarily mean equal shares!
Inheritance that may arise in the future is very rarely taken into account unless such monies are guaranteed. Usually there are no such guarantees and monies or property which may be anticipated on the death of a parent can easily disappear in care home fees or Wills may be changed as a result of a family argument!
There is no fool proof way to protect inherited assets but it does appear that keeping these assets completely separate from matrimonial assets and not using them for the benefit of you and your spouse can go some way to achieving this. Pre-nuptial or post-nuptial agreements, if correctly drafted, can also offer some security, but ultimately it is the Court which will exercise its discretion as to whether inherited property should form part of the assets available for settlement.
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