Inheritance can form an important part of a person’s financial circumstances, particularly where it has been received before or during a marriage. When a relationship comes to an end, many people are concerned about whether inherited money will be shared as part of the financial settlement and what impact it may have on the outcome of their divorce.
There is no automatic rule that inherited assets remain with the person who received them. Whether inheritance is taken into account will depend on the circumstances of the case and the overall fairness of the financial settlement. The way inherited assets have been used during the marriage and the financial needs of both parties may also influence how they are treated. Taking early legal advice can help you understand how inherited assets may be treated and how the court is likely to approach your particular circumstances.
Is Inherited Money Automatically Shared?
Inherited money is not automatically divided between spouses during a divorce. The court will consider all of the financial circumstances when deciding what constitutes a fair settlement, including the source of the assets.
In many cases, inherited assets may be treated differently from assets built up jointly during the marriage, but this is not guaranteed. The court retains a wide discretion and will always consider whether excluding inherited assets would still allow both parties’ reasonable financial needs to be met.
Where there are sufficient matrimonial assets available, inheritance may remain with the person who received it. However, where the available assets are limited, the court may decide that inherited money should be taken into account to ensure that a fair outcome can be achieved for both parties.
What Factors Will The Court Consider?
The court will look at a range of factors when deciding how inherited money should be treated. These include the length of the marriage, the financial needs of both parties, the value of the inheritance and whether it has been kept separate from other marital assets.
The court will also take into account the best interests of any dependent children when deciding what constitutes a fair financial settlement. The court will balance the interests of both parties whilst seeking to ensure that any settlement meets their reasonable housing and financial needs.
The court may also consider the overall financial resources available, each party’s earning capacity and the extent to which the inheritance has contributed to the family’s financial position. Every case is assessed individually, and no single factor will determine the outcome.
Does It Matter When The Inheritance Was Received?
The timing of the inheritance can be relevant. An inheritance received before the marriage may be more likely to be regarded as separate property, particularly if it has been kept apart from shared finances.
However, inheritance received during the marriage may still be taken into account, especially if it has been used for the benefit of the family, such as purchasing the family home or meeting household expenses. The longer the inheritance has formed part of the couple’s financial arrangements, the more likely it is to be considered alongside the other available assets.
Similarly, where inherited funds have remained separate throughout the marriage and have not been used for the benefit of the family, there may be stronger arguments for treating them differently from matrimonial assets. Nevertheless, the court’s overriding objective will always be to reach a fair outcome.
Can Inherited Money Become A Shared Asset?
Yes. If inherited money has been mixed with joint finances or used to acquire assets that both spouses have benefited from, it may become more difficult to argue that it should remain separate.
For example, using inherited money towards the purchase of the family home, paying off a joint mortgage or investing it in jointly owned assets may increase the likelihood that it will be taken into account during financial proceedings. Once inherited funds have become integrated into the family’s finances, distinguishing them from other matrimonial assets can become more difficult.
Every case will depend on its individual facts, and the court will consider whether excluding the inheritance would still allow both parties’ reasonable financial needs to be met. Even where inherited assets have retained their separate character, the court may still take them into account if this is necessary to achieve a fair outcome, particularly where there are insufficient matrimonial assets available to meet both parties’ needs.
How We Can Help
Donna Goodsell states that inheritance can be one of the more complex issues to resolve during financial proceedings, particularly where significant assets or family wealth are involved. Taking early legal advice will help you understand how inherited money may be treated and enable you to approach negotiations with clarity.
At Goodsells Family Law we provide clear and practical advice on financial settlements, ensuring that your interests are properly protected and that we achieve a fair and workable outcome.
How To Get In Contact
Contact us at Goodsells Family Law to discuss your situation and obtain tailored advice. Call us on 020 7622 2221 or email us at enquiries@goodsellssolicitors.co.uk.