How is inherited wealth distributed in a divorce?

Year Published: 2012

When asked to advise clients going through divorce proceedings in relation to financial settlements, the question of how the courts will approach inherited wealth is one that is often asked. The answer is ‘it depends’ – which on the face of it, isn’t a very helpful answer.

The difficulty lies in the fact that the court’s jurisdiction in divorce cases is a discretionary one. Within the parameters laid down by the Matrimonial Causes Act 1973, the judge hearing a case has discretion to deal with a couples finances in a way that is fair and reasonable, taking into account a number of different factors. There is no absolute answer.

What is clear is that no asset, however and whenever it has been acquired, is automatically excluded from being available for distribution between a divorcing couple. Nothing can be ‘ring-fenced’ with certainty.

What is also clear is that the judge’s primary concern will be to ensure that both parties, and any children’s and financial needs are met. If that requires the judge to redistribute inherited wealth, then the judge certainly has power to do so. However, once parties and children’s financial needs are met, then a judge may be persuaded that it would be unfair to go on and redistribute wealth inherited by one spouse to the other.

This is why establishing a parties financial needs can be so important. And the financial needs of one person can be vastly different to another. In the recent case of Y v Y, the wife received a lump sum of just under £9 million on a needs basis – which did involve an element of the husbands inherited wealth. For many people, needs will be established at a much lower level.

The discretionary nature of the divorce jurisdiction makes it all the more important to get expert advice when trying to negotiate, or litigate, a financial settlement in divorce proceedings.

To speak to us about a family / matrimonial legal matter please call Chester lawyer, Liz Bottrill in our Family team on 01244 305 922.

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