Inheritance in divorce is a tricky subject to navigate, especially if the wealth was received before the marriage took place.
On one hand, it may seem unfair that the inheriting party should concede their family wealth. However, the aim of a divorce settlement is to fairly distribute wealth and assets between the separating parties.
In this article, we’ll discuss what happens with your inheritance in divorce, and how it may be split between you and your spouse.
Will your spouse be entitled to your inheritance in divorce?
Inheritance is not automatically shared in a divorce, unlike assets such as the family home or joint savings accounts. However, it is not protected entirely from being divided in the settlement.
Divorce settlements are based around fairness between the two parties. Therefore, inheritance assets may be shared if ‘matrimonial’ assets are not sufficient enough to meet both parties’ needs.
Inheritance may also be shared depending on how it is used, which we will discuss later in the article.
Matrimonial vs non-matrimonial assets
A key part of understanding which assets are divided in a divorce comes from knowing whether they’re matrimonial or non-matrimonial.
- Matrimonial assets: These are assets you have acquired during the marriage, such as a family home or pension funds. They are usually divided between the two parties in a divorce settlement.
- Non-matrimonial assets: These are assets you acquired before or after the marriage. They are not usually divided in a divorce settlement, however they may be shared if the matrimonial assets are not enough to meet both parties’ needs.
Now, here’s where it gets complex.
If one person inherits a home before the marriage, it starts as a non-matrimonial asset. However, if this becomes the family home, it then transitions into a matrimonial asset, meaning it will likely be shared in a divorce.
It works the same way with inherited money. If the money is stored away and never touched, it will remain non-matrimonial. If a portion of the money is used for family reasons, like renovating the house or buying a car, it becomes matrimonial.
Can you protect your inheritance from your spouse?
Protecting your inheritance from your spouse in a divorce is somewhat possible, providing you take premeditated measures. These include:
- Nuptial agreements: When signing either a pre- or post-nuptial agreement, you can insert clauses to protect your inherited assets. The courts aren’t legally bound to uphold the agreement, but it will be taken into account, providing it’s fair to both parties.
- Separating inheritance from family finances: As previously mentioned, if you keep inheritance separate from family finances, it will remain non-matrimonial, becoming less likely to be divided. This doesn’t make it completely immune to being shared, however.
- Setting up a trust fund: If you want to make sure your inheritance is passed down to your children rather than your spouse, you can set up a trust fund. You will still be required to make the trust known during the divorce process.
Of course, these methods require foresight and aren’t guaranteed to entirely protect your inheritance in divorce. However, they can increase your chances of keeping inheritance assets out of the divorce package, especially if matrimonial assets meet requirements.
What happens if you fail to declare inheritance during a divorce?
If you fail to declare inheritance during the divorce process, you could face legal punishment, while potentially increasing the cost of your divorce. Opting for a fixed fee divorce can help you avoid unexpected legal expenses. Here is what you may be subject to:
- Reopening the case: If it is found that you’ve withheld inheritance, after the divorce settlement has been finalised, the case can be reopened.
- Contempt of court: This is the most extreme form of punishment, which can occur if you’ve deliberately withheld a large sum of inheritance. The punishment for contempt of court can range from fines to prison time.
- Paying legal costs: You may be ordered to pay your spouse’s legal costs if you fail to disclose inheritance.
Expert divorce advice from Osbourne Pinner Solicitors
Contact Osbourne Pinner for a completely free 30-minute consultation, with no obligations to proceed. Our local divorce solicitors can run you through all the information you need on inheritance in divorce, to give you peace of mind.
Contact us via the form below, call 0203 983 5080 or email us at [email protected].
