Can inheritance be split in a divorce and how does it get divided?
During a divorce, it’s usual for both partners’ assets to be pooled together and divided. But can inheritance be treated differently, and how exactly is it split?
Here we’ll examine inheritance divorce laws and explore some steps you could take to protect your finances if you don’t want them to be split or evenly divided with your spouse.
What is inheritance?
Legally speaking, inheritance is the receiving of money or assets from a person when they die. The inheritance could be left in the person’s will, or through the laws of intestacy if there is no will.
Is a spouse entitled to inheritance money?
There is no standard formula for calculating appropriate financial provision on divorce. Instead, the court has a duty to consider all the circumstances of the case and to consider a range of specific statutory factors set out in section 25 of the Matrimonial Causes Act 1973 (section 25 factors). The court’s approach is to calculate and then distribute the parties’ available resources between them to achieve a fair outcome.
When assessing the section 25 factors the court will take into account the following:
- They will look at income and capital i.e. what capital and income there is and what it is reasonable for each party to have.
- They will look at financial needs to include housing needs as well as income needs.
- They will look at the ages of the parties and duration of the marriage.
- They will look at physical and mental disabilities.
- They will look at standard of living.
- They will look at contributions i.e. where the assets came from.
- They will look at conduct but this is rarely unless it is particularly bad and financially related.
- They will look at what each party may lose i.e. pension benefits etc.
The first consideration though for the court is the welfare of any children and the needs of those children.
Where possible, the court seeks to achieve a clean break between parties on divorce, so that they are no longer financially dependent on one another.
When considering the section 25 factors and determining a fair financial outcome for the parties, different judges may reach different conclusions on the same facts, all of which would be within their judicial discretion. However, over the years, case law has developed a standard approach to the way the courts are likely to consider a given situation.
The starting point is that assets accrued during a marriage (matrimonial assets) are divided equally. The Court will look at the marriage as a partnership so that assets acquired or created during the marriage will be looked at as matrimonial regardless of who earned it unless there are exceptional circumstances.
If there are non-matrimonial assets, as may be the case with an inheritance, then this asset could be ‘ring fenced’. The Court can however invade non matrimonial assets if needs require this. A lot therefore depends on the following as to whether inheritance monies could be claimed successfully:
When the inheritance was received (if received pre or post marriage the asset may be less likely to be distributed);
- How long the couple were married;
- whether the inheritance was used to pay for a joint asset, such as a property, making it a ‘matrimonial asset’;
- If one partner is left at a disadvantage without the inclusion of the inheritance;
- The best interests of any children of the marriage.
Prenuptial agreements and inheritance
If you are thinking ahead before you get married, you may decide to outline what will happen to any inheritance in a prenuptial agreement. If you are already married, you can do something similar with a postnuptial agreement.
It is important to note that prenuptial agreements and postnuptial agreements are not always legally binding: even if you have an agreement with your spouse that they will not be entitled to your inheritance, this could be overruled by the courts. However, having an agreement in place certainly puts you in a stronger position and in many cases it will be upheld.
What other options are there to protect my inheritance?
If you feel strongly that you do not want your partner to be entitled to part of your inheritance, a financial consent order is advisable. This is a legally binding document that sets out what you have agreed in terms of financial arrangements.
If you are concerned about protecting your children’s inheritance in a divorce, one option is to place it in a trust, naming the children as beneficiaries. You may also want to consult inheritance tax specialists to ensure that you do not pay more tax than you need to.
Financial settlement during a divorce is a difficult task that can be prone to dispute. When inheritance is involved, the stakes are higher: high-value assets may be involved, and there may be an emotional component, too. At Hepburn Delaney, our specialist inheritance dispute solicitors can help you to reach a financial settlement with your spouse.
Get in touch
For legal support through your divorce, get in touch with our specialist divorce solicitors. We can help make the process run smoothly. Contact us on 01442 218090 to arrange an appointment by phone, video call or in person.