Inheritance and Divorce – Can You Ring-fence an Inheritance in a UK Divorce? banner


Inheritance and Divorce – Can You Ring-fence an Inheritance in a UK Divorce?

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If you are getting divorced one of the pressing things that you will need to sort out is your divorce financial settlement and secure a financial court order from the family court.

When you have received an inheritance, or if you are due to receive one, it is understandable that you want to protect and preserve the inheritance and not want to share it with your estranged husband or wife especially if the money has come, or is coming, from your relatives and your side of the family.

In this article, our family law solicitors look at inheritance and divorce and answer your questions on whether you can ring-fence an inheritance in a UK divorce.

Online and London Family Law Solicitors

For family law legal advice call the expert London family lawyers at OTS Solicitors on 0203 959 9123 or complete our online enquiry form.

Ringfencing an inheritance

Ideally, family law solicitors are consulted about ringfencing assets before the marriage has even taken place. That way your family lawyer can draw up a prenuptial agreement that will give you the best chance of ringfencing a specific asset, such as an inheritance.

If you decide that you do not want to sign a prenuptial agreement a family law solicitor can give you tips on how best to protect your inheritance. For example, by keeping the inherited money in a separate bank account and not sharing it with your husband or wife or not using it for family purposes. For example, not using the inheritance to pay off the mortgage on the family home or to pay off family loans, or fund an extension to the family home.

Is an inheritance protected from a divorce financial settlement?

An inheritance is not automatically protected and ringfenced from claims in a divorce financial settlement. Family lawyers and the family court will consider a series of questions and decide if the inheritance is ringfenced from the financial settlement, namely:

  1. Is the inheritance a family asset or matrimonial property or is it classed as non-matrimonial property?
  2. If the inheritance has been shared (making it into a matrimonial asset) the inheritance will not be ring-fenced. The family court will divide all the assets to achieve a fair divorce financial settlement after considering the statutory criteria in section 25 of the Matrimonial Causes Act 1973. The fact that the inheritance is a family asset does not necessarily mean the inheritance will be shared equally as the court will consider a whole range of factors, including each party’s contributions to the marriage and the length of the marriage
  3. If the inheritance is a non-matrimonial asset, it will only be shared or form part of the divorce financial settlement if it is necessary to have recourse to it to meet reasonable needs. For example, a couple is married for 12 months and has 5-year-old twins born before the marriage. The equity in the family home is £100,000 and that amount of equity is not enough to provide 2 house deposits for 2 London properties taking into account the husband and wife's earnings and mortgage capacities and housing needs. If the wife's inheritance of 500,000 is taken into account because of ‘need’ the husband can receive the entire proceeds of the sale of the family home and use the £100,000 as a deposit for his new property that is large enough to enable both parents to co-parent their children

Is an inheritance a non-matrimonial asset?

Family lawyers are often asked to advise on whether an asset is a non-matrimonial asset or not. The answer lies in individual circumstances so a family law solicitor will need to gather information about the inheritance and family circumstances before offering specific advice.

The best way to make it clear that an inheritance is a non-family asset is to ringfence it by signing a prenuptial agreement. It is not too late to sign an agreement if you are already married as you can enter into a postnuptial agreement. This type of agreement is just the same as a prenuptial agreement but signed after your wedding.

You may still have very strong arguments that your inherited money is not a family asset if you have kept the inheritance separate and apart from any family savings and did not mix it with other family assets.

Family law solicitors say that the topic of inheritance can be a very emotive one as people naturally want to hang onto a legacy left to them. When arguing over an inheritance it is important to consider the size of the legacy as you do not want to spend more on lawyer’s fees than the amount of the disputed inheritance even if the gift has an emotional attachment to you. A family lawyer can help you cut through to what is important and help you focus on reaching on a divorce financial settlement that is fair to you and meets your needs and those of your husband or wife.

Online and London Family Law Solicitors

For family law legal advice call the expert London family lawyers at OTS Solicitors on 0203 959 9123 or complete our online enquiry form.

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