The effect of inheritance on the outcome of financial remedy proceedings

Going through divorce and dividing financial assets is always difficult. There is so much to consider and the law can be complicated. Things, unfortunately, can become even more complicated when one spouse has inherited funds which they want to retain for themselves.

Alexandra Johnson, Trainee Solicitor at Northampton Family Law, explores the impact of receiving inheritance on the outcome of financial remedy proceedings. There are no set rules when considering whether inheritance should be shared between the spouses, so she  explores some of the arguments which may apply.

The spouse who has the inheritance will need to satisfy the court that these funds should be ring-fenced and should not be included in the division of the matrimonial pot. The matrimonial pot is a term used that covers all of the assets and liabilities in a marriage, including property, debts, investments, bank accounts and other valuable items. If the asset is ring-fenced, it means it is separated from the matrimonial pot, and whilst its presence will not be ignored, it will not be available for division or distribution.

Understanding when inheritance is ring-fenced

If inheritance has been received during the marriage then the funds or assets may have been “mingled" with the other assets of the marriage. This means that it is hard to define exactly what is an inherited asset or assets that have been accrued during the marriage. If the inheritance and the assets of the marriage have been mingled is the case it is likely these assets or funds will be considered as matrimonial assets as the inheritance pot can no longer be easily defined.

If inheritance is received either shortly before or post separation and has been kept separate from the matrimonial pot then it is far more likely the inheritance will be ring-fenced and kept separate from other assets.

Another factor to consider is the size of the matrimonial pot. If the matrimonial pot is sufficient to meet both parties’ needs without the need to rely on the inheritance then an argument to ring-fence the inheritance may be stronger.

If there are insufficient assets of the marriage to meet the needs of both spouses, then there is an argument that the inheritance funds should be used to meet those needs, especially if there are dependent children involved.

Each couple's circumstances are different and it is always advisable to get specialist legal advice when going through a divorce.

Family Law Group can advise you on your particular set of circumstances and talk you through your legal position. For further information, please contact Alexandra on 01604 634000 or email alexandra.johnson@familylawgroup.co.uk