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The treatment of inheritance on divorce

In England and Wales the law relating to financial property when a couple divorce is discretionary and wide ranging.  The principles acknowledge that the circumstances surrounding separating couples and families are countlessly different and a ‘one size fits all’ approach would never work.  However, for us lawyers it can make it very difficult to predict the likely outcome of a particular case.

This is particularly apparent when we are dealing with inheritance.  Our divorce laws do not distinguish between ‘inherited property’ and ‘matrimonial property’ but simply requires the court to consider the property and other financial resources which each party has or is likely to have in the foreseeable future.  It also looks at contributions which each party has made or is likely to make in the foreseeable future to the welfare of the family amongst a number of other factors.

When divorcing there is a duty on both parties for inheritances or potential inheritances in the foreseeable future to be disclosed.  Inheritance will be treated as a contribution by one of the parties and the extent to which that contribution will be relevant will depend on all the circumstances of the case. 

In the case of White v White (2000) Lord Nicholls said that inherited property should be taken into account but that it should be decided how important it is in a particular case.  Does that make it any easier for us?  Probably not, it simply reinforces the court’s discretionary approach.  However, the Court’s first consideration on a divorce is to be given to the welfare of any child of the family.  In the vast majority of cases that will mean that any inheritance already received or about to be received will need to be taken in account on the basis that all available money, wherever it may have come from, will be required to provide accommodation for the parties and their children.  If using the inherited property is the only way of meeting the parties’ needs (and those of the children) then that is what will happen more often than not.

But what about cases where inherited assets are much more significant and the needs of the parties and their children can be easily met from other resources?

In circumstances such as these the court must consider the nature and value of the inherited property and how it came about.   An asset passed down through generations may be treated differently.  An example of such an asset would be a family farm where it would seem completely unfair to force its sale when one party’s family has lived and worked there for many generations.  The parties’ standard of living is also very relevant – the longer the wealth has been enjoyed during the marriage the less likely that it will be ring fenced and excluded from the ‘pot’.

Certainly from my experience it seems that the longer the marriage and the longer the inheritance has been in existence the more probable it is that inherited assets will be included in the ‘pot’ and shared.  Where an inheritance is received towards the end of a marriage or after the parties have separated it is more likely to be treated differently.  However, this is certainly not always the case.

Whilst there is some clarity for cases where money and property is limited, in cases of medium to large wealth it continues to be extremely difficult to predict the outcome of a particular case. 

 By Lisa Burton-Durham