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What will happen to my inheritance if I divorce?

View profile for Sarah Overy
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Going through a divorce is often a time of significant financial upheaval, and the division of assets is a cause of worry for many couples considering a split. Past inheritances and anticipated future inheritances are commonly relied on as an essential bolster to the family finances, and consequently, many people are concerned about whether these will be added to the divorce ‘pot’ to be divided up. To make matters worse, the additional sentimental value attributed to assets inherited from loved ones can further complicate matters emotionally. So, what is likely to happen to your inheritance when you divorce? And what can you do to protect it?

How are assets divided in the event of a divorce?

Most assets gained during the marriage (commonly referred to as ‘matrimonial’ assets) are considered the property of both parties and are therefore almost always put into the pot. This includes:

  • Property
  • Earnings/pension acquired through work
  • Business and investments
  • Money

The majority of divorce settlements are decided on a case-by-case basis, with the judge bringing many different factors into his or her final decision. The judge will consider the needs of any children you have, the needs of you and your spouse, the length of the marriage, and any other factors deemed significant.

Generally, if the pooled matrimonial assets are enough to meet the needs of both parties, then non-matrimonial assets (i.e. acquired before the marriage) may be left out of the pot. However, the judge has discretionary powers and the split of assets will ultimately depend on your personal circumstances.

So how does inheritance fit into this?

Past inheritances

If you received an inheritance prior to getting married or during the time you were married, consideration will be given to when you received it, how much it is worth and what you did with it while you were married. For example, if you moved the funds into a joint account or used it to buy a property together, it is more likely that it will be considered a matrimonial asset and form part of the pot.

If your inheritance has been kept separate and has not been used while you were married, it’s more likely that it will be excluded. But ultimately, in the event of a divorce the needs of the family must be met. If the matrimonial pot cannot cover this, then it is likely that your inheritance could be split.

Future inheritances

Prospective future inheritances are usually not taken into account at the time of making a divorce settlement. However, your ex could in theory stake a claim for any inheritances you receive later on. To prevent this from happening you may want to consider taking out a consent order upon divorce.

If the funds from an inheritance are expected to come in the very near future, it is possible that court proceedings can be adjourned until they are available for consideration.

How can I protect my inheritance in the event of divorce?

There are a handful of different protective measures you can take when it comes to inheritances, either past or future.

  • Pre- and post-nuptial agreements
    Pre- or post-nuptial agreements act as a guide to what happens in a divorce and how the assets are divided, and it is a good idea to get one if there are certain assets you want to protect. However, pre- and post- nups are not legally binding in the UK, so a judge will still be able to override the terms if it is necessary to meet the needs of the family.
  • Trusts and estate planning
    If you expect to receive an inheritance from a relative one day but are concerned about protecting it, it is advisable that they seek advice regarding trusts and estate planning as this can help to keep the assets secure in the event of a divorce.
  • Consent order
    A consent order serves the purpose of finalising all financial obligations upon divorce and prevents either party making a claim in future. It must be signed by both parties and is a legally binding agreement.

The treatment of inherited wealth in divorce can be complicated, and every family’s situation is different. It’s therefore essential that you take legal advice as early on as possible in order to help you protect your interests and find the best solution for your family.

Gepp & Sons’ family solicitors are highly experienced in all facets of divorce and can provide practical advice for your individual circumstances. If you have questions about divorce and inheritance and need to talk through your options, or to find out more about how we can help, get in touch on 01245 493939 or send us an enquiry via our website.