You’ve just received a substantial inheritance from a deceased parent or relative. It may represent family legacy, financial security, or funds intended for your children’s future. Then your marriage deteriorates, and you’re facing divorce. Here’s the critical question: Will you have to share your inheritance with your spouse?
The answer isn’t simple. Whether inherited money remains yours, is partially divided, or is fully divided depends on multiple factors, such as when you inherited it, how you used it, whether you mixed/mingled it with marital assets, and what the court decides is “fair.” This complexity makes inheritance one of the most contested issues in divorce settlements in family law.
This comprehensive guide explains how inheritance is treated in divorce, how to protect inherited wealth, and what to do if inheritance issues arise in your settlement negotiations/court proceedings.
The Basic Legal Principle: Is Inherited Money Separate Property?
The Starting Position
In English law, inheritance is considered non-matrimonial property. This means:
Money inherited during marriage remains, in principle, separate property. It’s not automatically shared equally with your spouse on divorce. However, the English court has substantial discretion to override this presumption if they believe fairness requires it. In some cases, inherited assets may be included in the division of assets, with the court making an unequal division if the circumstances or needs of the parties justify a departure from an equal split.
Robson v Robson (2010)
The landmark case of Robson v Robson confirmed that inherited property is not treated as matrimonial property, even if received during the marriage. However, the court also confirmed that:
Inherited property can be considered as an available resource. If it is necessary to meet a spouse’s financial needs, courts may make claims against inherited wealth. The weight given to inherited property depends on its use and the circumstances.
Bottom line: Inherited money is protected but not absolutely insulated from division in divorce.
How the English Family Court Treats Inherited Money: Key Factors
The court considers various factors when deciding whether inherited money remains yours or is divided:
1. When the Inheritance Was Received
- During the marriage: The longer the marriage continues, the more likely inherited assets become intermingled with marital assets. If inherited assets are mingled then they will likely be available for division on divorce.
- After separation: If you receive your inheritance after separation, it generally will remain separate unless one spouse cannot meet their needs from their share of the existing assets.
- Once a “clean break” order has been made: Once a final financial order has been made with a clean break, all future financial claims between spouses are dismissed. Any inheritance received after that point is a post-order asset, and your ex-spouse has no entitlement to it. (Although this assumes that full and drank disclosure wad made at the time the order was approved).
2. How You Used the Inherited Money
This is critical. The court will distinguish between:
- Money or assets that are “ring-fenced” (i.e. kept completely separate): This includes where funds are held in a separate bank account in your sole name and have not been mixed with marital assets and has not been used for the family’s benefit (for example payment of a mortgage secured against the family home).
- Partially Mixed: An example of partial mixing is where you used some of the inheritance for a down payment on a family home and/or contributed to the payment of the mortgage from your separate inherited assets.
- Fully Integrated: This would include a situation in which your entire inheritance was used to pay for a family home and/or used to meet family living expenses. You may also have spent your inherited funds on joint family projects or investments, thereby co-mingling them with marital assets. If you placed inherited money into a joint account and used it for shared expenses, the court may also find it more difficult to exclude it from consideration.
3. The Length of the Marriage
- Short Marriage (1-5 years): If you divorce after a short marriage, the court will be more reluctant to divide assets not acquired during the marriage (unless there are children and it is necessary to invade inherited assets to meet needs).
- Medium Marriage (5-15 years): How your inheritance has been deployed will be critical. The court may invade inherited assets to meet needs, especially if there are children of the marriage.
- Long Marriage (15 or more years): The longer the marital partnership, the more likely the inherited assets will have been mingled and therefore treated as marital. It is also more likely that inherited assets will need to be invaded to meet a needs claim.
4. The Financial Needs of Your Spouse
This is crucial. Even if inheritance is technically separate property, if one party’s financial needs cannot be met from their own resources combined with their share of the matrimonial pot, the court may order that assets be divided equitably to prevent hardship.
This is divided into housing and income needs. If there is not enough money in the matrimonial pot and there are inherited assets, the court may order that a portion of the inherited property be used to meet needs. The inherited property will be divided to ensure your spouse is not left in financial hardship. If your spouse is financially independent or has adequate resources, inherited property is much more likely to remain untouched.
5. Whether You Have Other Matrimonial Assets to Meet Needs
If you have sufficient other matrimonial assets (marital property, retirement savings, other investments), the court is more likely to protect inherited property. If inherited wealth is your only significant asset, the court may be more willing to divide it (although depending on the value of your inheritance they will not necessarily divide it equally).
Civil Partnership and Divorce: How Inheritance Is Treated
The principles governing civil partnerships are the same as those for married couples. Still, there are important nuances to consider, especially when dividing matrimonial assets and inherited wealth.
When determining how to divide assets in a dissolution of a civil partnership or divorce, the court will consider the same factors as they would upon a dissolution of a marriage. As in divorce arising from marriage, the overriding principle is fairness, and the court’s primary aim is always to ensure that the financial settlement meets the needs of both parties and any children.
Pre and Post-nuptial agreements
Pre-nuptial and post-nuptial agreements can play a crucial role in protecting inherited assets in both marriages and civil partnerships. While such agreements are not binding in England and Wales, they are being given increasingly significant weight. Such agreements can clarify how inherited and other assets will be divided upon separation, providing greater certainty and protection for inherited wealth.
Protecting Inherited Wealth in Divorce
1. Keep Inheritance Completely Separate
If you’re anticipating or have received an inheritance it is important to try and “ring fence” your inheritance by keeping it entirely separate.
- Bank Accounts: It is advisable to open a separate account in your sole name. You should not deposit marital funds into this account or allow your spouse to access the funds in that account. You should keep all your transaction records so that in the event of a divorce you can evidence that the funds have been ring fenced.
- Investments: Invest inherited funds in separate investment accounts in your sole name. It may be sensible to invest via a different financial institution from the one used for marital investment accounts, although that is not essential provided your inheritance is clearly kept in a separate account. You should maintain clear records of the source of the investments.
- Property: If you own real estate separately, it is advisable to keep or purchase the property in your sole name and it is essential that you do not include your spouse’s name on the title. Do not use inherited property as a marital residence (if possible).
- Documentation: Keep copies of inheritance documents (will extracts, tax documents, transfer documents). Maintain records showing the source of the inheritance and document date of receipt and fund movements.
2. Create a Will or Trust Protecting Inherited Wealth
Before marriage or early in marriage:
Update your will to protect inherited assets for your children or heirs. Consider trust structures that protect inherited family wealth.
3. Enter into a Post-nuptial Agreement
If you’ve already received an inheritance (or expect one) and want clear protection it is advisable to enter into a post-nuptial agreement (agreement signed during marriage). This will document that inherited wealth remains separate property. The agreement should specify how inherited property is treated if the marriage ends. Both parties must receive independent legal advice for enforceability.
4. Avoid Co-mingling Inherited Funds
You should try and keep your inherited property separate from marital property by avoiding co-mingling. This means there will be less ambiguity as to the source of the funds in the event of a divorce and can lead to fewer disputes and lower legal costs in the long-run.
5. Full Financial Disclosure
Full and frank disclosure of inherited property is essential. If inherited assets are not disclosed and your spouse later becomes aware of this, they may make an application to the court to set aside the financial order.
If you are found to have been dishonest in your disclosure, there may be adverse costs consequences. In addition, it is likely to damage your credibility before the court and may result in you losing the judge’s confidence and sympathy over the longer term and you may get a worse result than if you had just been full and frank from the outset.
6. Obtain Legal Advice Early
If you are considering a divorce and you have inherited assets you should consult a family law solicitor early so that you can discuss with them how best to protect your inherited wealth and understand what is at risk.
The Role of Your Solicitor in Inheritance Matters
A specialist family law solicitor helps by:
- Evaluating whether your inherited property is protected or at risk.
- Gathering evidence showing the inheritance source and how funds were used.
- Negotiating with your spouse’s solicitor to exclude or limit claims on inherited property.
- Drafting agreements that protect inherited wealth.
- If the spouse has received an inheritance, investigate and recover it.
- Presenting evidence effectively if inheritance disputes go to court.
Why Choose Edwards Family Law for Inheritance Matters?
At Edwards Family Law, we have extensive experience protecting inherited wealth in divorce and family law proceedings.
Edwards Family Law specialises in protecting the interests of high net worth clients in family law matters, including inheritance protection, asset division, and pre-nuptial and post-nuptial agreements. Our team combines family law expertise with forensic financial analysis to protect clients’ interests and assets.
This article is for general information purposes only and does not constitute legal advice. Family law continues to evolve, and each situation is unique. For advice specific to your situation, contact Edwards Family Law.