Divorce Advice on Ring-Fencing Inherited Assets
14 March 2017
When getting a divorce it’s common for people to be concerned about how any inheritance they have received, or are due to receive, is considered by the Courts. People want to know if an inheritance can be kept out of the marriage “pot”.
When considering how matrimonial assets should be split, the Court would usually start at the point of equality, meaning as close to a 50/50 split as possible. However, the Court will also look at other factors when deciding what is fair. For example, the Court will consider the length of the marriage, the standard of living enjoyed by the family, the resources which are available to the spouses, as well as the financial needs of each person.
When looking at inheritance, there is no specific reference to this within the law, and so it’s common for one spouse to ask if they can protect any inheritance that they have brought to the marriage.
If you have already received the inheritance before or during the marriage, then it’s possible to argue that the Court should “ring-fence” this asset, meaning it is kept out of the marriage pot.
Legally, in England & Wales, inheritance should not be treated in the same way as other property or assets that are acquired during a marriage, and the spouse that has not inherited would have a weaker claim to it.
If you wish to ring-fence any inheritance then its value and nature is important, as are the circumstances in which it was provided to you. For example, the Courts would treat the inheritance of a sum of money differently to a property that has been in your family for generations.
However, even though you could argue for your inheritance to be ring-fenced, it will not be excluded entirely from the Court’s view. The Court has the ability to decide whether any inheritance should be split, and in what proportions.
The Court will look at each individual case separately. It’s more likely that inheritance would be shared in longer marriages, as it’s more difficult for the Court to figure out where each individual asset came from, as finances can become tangled after longer periods of time together.
The Court will also consider splitting inheritance if the needs of the other spouse or a child cannot be met, without including it in a Divorce Financial Settlement. The Court have to ensure an element of fairness, and that the needs of spouses are met where possible.
With regards to an inheritance that may be received, this is looked at slightly differently by the Court. You could argue that if your spouse is due to inherit property, or assets within the near future, this should be included within a Divorce Financial Settlement. However, the Court does not usually attach much weight to this argument because of the uncertainty of the situation, and what, if anything would be inherited.
If you are not married and wish to protect any inherited assets, it would be advisable to get a Prenuptial Agreement.