We are all told to plan ahead, to save tax and to gift our allowances to our children - but how are these assets treated in the unfortunate event of a divorce?
The bad news is that money or property inherited during a marriage are not automatically excluded from the assets to be divided. The court will need to take a number of factors into consideration in order to decide what should happen. The size of the inheritance received, the timing of when it was received, the length of the marriage, how the inheritance was dealt with during the marriage and the financial needs of the parties are all considerations of the court.
If the inherited assets have been 'intermingled' with the matrimonial assets - then this can give rise to a claim that the inheritance should be treated as part of the matrimonial pot and therefore capable of sharing upon divorce between both spouses. The same would apply if an inherited asset had been transferred into the parties joint names, or used for the benefit of the family.
Inherited assets can be treated as matrimonial assets if both parties 'needs' (as defined under the Matrimonial Causes Act) require it to help meet the parties capital or income requirements upon divorce. The extent of a parties needs can vary considerably, and indeed can become the subject of dispute. Needs will depend upon many factors including the length of the marriage, the provision for any children and the standard of living enjoyed by the parties during the marriage.
In terms of protection - what is clear is that the ring fencing of inherited assets away from the matrimonial pot is more likely if it has been kept separate, and if it is not required to help meet the party's needs.
For more information or advice please call us on: 01392 337000, or visit www.ashfords.co.uk/expertise/family