The treatment of inherited assets in divorce settlements

Should inherited assets be included in the “pot” of matrimonial assets available for division between divorcing parties?  The Law is governed by section 25 of the Matrimonial Causes Act 1973 and the Court has a duty to “have regard to all the circumstances of the case”.  These include the income, earning capacity, property and other financial resources which each of the parties to a marriage had or are likely to have in the foreseeable future.

Though it is taken into account, much depends on the timing of the inheritance. There are three instances which  are :

• in respect of inheritances received before the parties met or married in the case of G W v R W (Financial Provision; Departure from Equality 2003) the Judge held that to exclude assets which were received prior to the marriage would be contrary to Section 25 of the Matrimonial Causes Act.  However some departure from an equal division was justified in this case on the grounds that the husband had brought into the marriage a large sum of money together with existing high earnings and an established earning capacity
• inheritance received during the relationship.  The case of Currey v Currey 2005 shows that the court treats inheritance as potentially being in the pot for distribution and this was so in this case event after the original divorce settlement had been agreed.
• inheritance to be received at some-time in the future.  In M T v M T (financial provisions: lump sum) 1992 the Court decided that where there is a real possibility of capital being available in the near future, then the Court could exercise their discretion and adjourn an application for final decision in relation to a settlement.  In this case the husband’s father was likely to die within a few years.  However the general principle is that there should only be a postponement of the decision in circumstances in which justice to both parties can be done if there was an adjournment.

However, usually future inheritances are not taken into account; the reason being that anyone can change a will and that there are no guarantees that either party will eventually inherit under a will.  Inheritance is only one of the factors to be taken into account.  This is a complex area of law and each case has it own set of circumstances

For advice regarding relationship breakdown and divorce, call  Julie Wain on 01889 583871 or 01785 211411

24 November 2008

Disclaimer

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances. (50587)