During divorce proceedings, the court will divide marital assets, such as property acquired during the marriage, equally between both parties to reach a financial settlement. However, should the marital assets not be sufficient for the needs of both parties, the court may consider non-marital assets such as inheritance. So, what do you need to know about your inheritance and what can you do to protect it?
When Is Inheritance a Marital Asset and When Is It Not?
If you have received inheritance during your marriage which has been “intermingled” with the marital assets, then it will be included in the assets to be divided between both parties. For example, if the inheritance has been used to pay off the mortgage on the jointly owned family home, the spouse contributing to that investment is unlikely to be given credit for the contribution.
However, if the inheritance has been kept separate, such as through investment in the sole name of one party, then there is an argument for “ring-fencing” that investment. The court will need to consider if the needs of both parties can be met from the other jointly accrued assets. If they can be met, then the spouse with the inherited asset may argue that the inheritance should be retained by them absolutely. It is unlikely that, if needs cannot be met from the jointly accrued assets, the inherited asset will be kept separate and will instead be considered as part of the assets to enable a fair division.
Future inheritance that has not yet been received will not be included as this asset may never actually be acquired, for example, where the beneficiary dies before they have received the inheritance or the gift under the Will is subsequently withdrawn.
Protect Your Inheritance
To protect any inheritance from your spouse, or if the person giving you the inheritance would like you to protect it, it is important to speak with a solicitor in order to draw up the correct agreement. This may include a pre (before marriage) or post (after marriage) nuptial agreement. Despite these not being law-binding, a judge will consider the signed agreements when making a decision on the financial settlement and therefore they could play a vital role in divorce proceedings.