A point of dispute when considering what a fair division of assets may be, is when one (or both) parties have received inheritance from family or a third party. Inheritance is an emotive issue, but it is not necessarily straightforward when considering if the inheritance should be included in the assets available for division, i.e. whether it is classed as a matrimonial asset. The courts recognise that there are circumstances in which it would be unfair to include one party’s inheritance, for example if the inheritance was received before the parties met.
Inherited wealth can, therefore, be ringfenced by the courts in England and Wales and not included in the matrimonial pot for division, but only in certain circumstances. It is important to obtain advice on inherited assets and how this is likely to be treated by the court, as this will depend on the specific facts in your case.
How is Inheritance viewed by the courts and will this be shared equally between the parties?
This comes down to understanding what a marital asset is and what is a non-marital asset.
- Marital assets – These are assets accumulated jointly during the marriage, such as savings, investments and property. These will automatically be considered together in the pot of assets to be divided regardless of who owns them.
- Non-marital assets – These are assets that one of the spouses owned prior to the marriage, or which were sourced outside of the marriage, such as an inheritance received by one spouse from a family member, or other. These assets can be excluded from the assets that are to be divided between the parties, but it will depend on how the particular asset/capital has been treated during the marriage.
It is more likely that inheritance will be protected from the division of assets in divorce, in cases where there is sufficient matrimonial capital to enable both parties to comfortably meet their ongoing needs. When establishing a parties’ needs, they will be assessed on the overall circumstances of a case, with the parties’ lifestyle during the marriage being a key indicator.
The courts have a great deal of discretion in family cases but fundamentally the outcome they seek to achieve is one of fairness in the circumstances. The courts will look at a number of factors when deciding upon a fair split of assets and whether an inheritance will need to be included in the split at all. This will involve:
- The standard of living achieved during the marriage
- The age of each spouse
- The health circumstances of each spouse
- The earning potential and income of each spouse
- The needs of children from the marriage and who they will be living with
Other influential factors a court will take into account when deciding whether an inheritance should become a marital asset include:
- The value of the inheritance
- When the inheritance was received
- Length of the marriage
- If the inheritance has been utilised in part during the marriage
The above factors are considered in the whole, and there is not usually one isolated decisive factor. In summary, inheritance can be protected from one party in certain circumstances, but it is not automatically protected. Consideration should be given to protect inheritance from the other party, and other assets, particularly in high value cases, by way of a pre- or post-nuptial agreement, which sets out an agreement between the parties on how their assets should be divided if they separate in the future.
Expert advice on divorce settlements
If you need professional legal advice on divorce settlements, and whether your inheritance will be included, talk to our divorce solicitors at Consilia Legal today.