Going through a divorce is a life changing and difficult process. Along with the emotional pressures there are difficult decisions to be made and complex negotiations to get through. An almost inevitable worry is what the divorce means to your assets and finances. In this newsletter we consider what can be an extremely contentious area; inheritance and the ability of your ex-partner to claim it.
Although one may expect that marital assets will be divided upon divorce, it can often come as a surprise and leave a party feeling as though they have been treated unfairly when a court decides that a large share of inheritance goes to the other partner. The starting point when considering an issue such as this is section 25 of the Matrimonial Causes Act 1973, this sets out the rules relating to financial remedy on divorce. Unfortunately the legislation does not specifically provide for inheritance and this means that we must turn to case law for guidance on the matter.
In the case of White v White it was established that there was no strict rule to say that there should be an equal division of assets on marriage and that in most cases there will be a good reason why a 50/50 split is not the final outcome. The court will be considering all of the available assets, including inherited property when looking to balance the needs of the parties. However, the other partner generally has a weaker claim to assets such as inheritance unless both parties’ needs cannot be met without the division of such assets.
For further guidance on this or other surrounding questions please call the Health Assured helpline to speak to a member of our advice team. Also remember that the counselling team is available 24/7, 365 days a year to help with the emotional aspect of divorce or separation and any other matters which are causing distress.
What does this mean in practice?
The needs of each party are subjective and it is worth remembering that in any divorce situation, the needs and welfare of any children take priority over that of the parents and can therefore have a substantial impact on the judgement. Essentially this means that the court will avoid delegating inherited wealth without good reason, but in making that decision they will be looking at what is fair in all the circumstances and factors such as dependent children and the length of marriage will have a large part to play. In Robson v Robson the court also recognised that the nature of the inherited asset may be a relevant factor, indicating that something of sentimental value could be treated differently to something which is purely financial.
What can you do?
- Plan ahead, think about what both you and your partner want. Marriage is a lifelong commitment but planning for the worst should not be seen as a negative. If things do then take a turn for the worse, having a considered approach will avoid difficulties and expense later down the line.
- Keep assets which you want to remain yours in your sole name. Although this won’t necessarily impact the outcome, it demonstrates your intention to keep the asset separate from the marriage and this can be a relevant factor later down the line.
- Pre or post marital agreements, although these are not specifically enforceable by the courts of England and Wales, it can carry a good deal of weight if drafted correctly and therefore offers reassurance to those with concerns.
- Clean break orders upon divorce will protect assets which aren’t in your possession yet, but may be in the future. These assets can still be vulnerable despite the divorce unless the clean break order is in place.