Divorce and Inheritence

Divorce and Inheritence

We get asked so many times about inheritance when going through a divorce.  A common issue is when the marriage has benefited from one spouse’s inheritance. This would go into the family pot now but the other spouse has an inheritance in the future.

Generally, all assets of the marriage are pooled and treated as joint assets in a divorce. Money and property that have been inherited are included in the assets to be divided.

However, every case is different. The size of the inheritance, when it was received, how it was dealt with during the marriage all affect how it is dealt with during the divorce. The financial needs of one or both parties may mean that inherited assets have to go into the ‘pot’.

Although each case is different, we are able to share some guidelines based on our experience and previous court cases. We have split them into previous inheritances and future inheritances (those yet to be received but due).

Previous Inheritance

Inherited assets that are transferred to joint names or used for the benefit of the couple/family, they are likely to form part of the ‘pot’ of matrimonial assets available for division by the Court.

Inherited assets received shortly before the breakdown of the marriage are less likely to be included in the matrimonial assets for division. This will depend on whether the other assets are sufficient to meet the couple’s or family’s future needs.

The needs of the family, whether there are children, will be the primary consideration for the court. Inherited assets or assets derived from the inheritance can be transferred to the other party to meet those needs of the family.

Future Inheritance

Usually, future inheritance is not taken into account when dealing with the financial aspects of a divorce. It may be, if it is expected that the person making the bequest will die in the near future and the future inheritance is likely to be substantial. Courts may even adjourn the proceedings until the inheritance is received.

The big question is “when is that future” going to occur? There are a number of pertinent questions which will undoubtedly upset one party. Looking at when someone will die is, as you can imagine, like asking how long is a piece of string?  Should one take less of a settlement now because they may get some benefit in the future? And don’t forget wills can be changed. However, if the money has already been placed in a trust then this would be deemed as a definite benefit.  But once again only in the future just like a pension is a benefit to one or both but only in the future if they are years from retirement.

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