Is inheritance included in a divorce settlement?

Is my spouse entitled to half my inheritance?

The inclusion of inheritance in a divorce settlement is conditional on many variables specific to each marriage.

Assets in a divorce are either matrimonial or non-matrimonial. Matrimonial assets, which were acquired during the marriage, go into the pot of assets which can be divided between spouses. Non-matrimonial assets, on the other hand, are assets which either spouse acquired before or after the marriage and do not automatically fall in to the pot. Inheritance is classed as a non-matrimonial asset.

Generally, inherited assets will be considered non-matrimonial and ringfenced. As per the landmark case White v White, the court will distinguish inherited assets as coming from a “wholly external source” to the marriage and treat them as non-matrimonial. However, this is provided that the needs of the other party can be met without access to the asset. 

How does the court treat inherited assets in Divorce? Caselaw examples:

In K v L [2011] EWCA Civ 550, the court considered the treatment of the wife’s non-matrimonial shares in a family business. These were worth £57.4 million by the time of the hearing and represented virtually the entirety of the parties’ fortune. The family had always lived a modest lifestyle despite this wealth. The husband argued that departing from the equal sharing principle and awarding him only £5 million to meet his needs was discriminatory. Wilson LJ (as he was then) disagreed and reinforced that the recognition of the wife’s unmatched financial contribution was not discriminatory where the husband’s needs could be met without having to take any more from the non-matrimonial assets. 

Following this, the High Court considered inherited assets again in Y v Y [2012] EWHC 2063 (Fam). The court held that the husband’s inherited estate, which made up most of the couple’s wealth, would be treated differently as a non-matrimonial asset. The court again confirmed that inherited wealth does not have to be divided equally, “but its value and the lifestyle that it produced are relevant factors in the court’s consideration of fairness.” 

sharing inherited assets to meet needs

When the courts consider non-matrimonial assets, including inherited property, there are multiple factors they must consider when deciding on how those assets should be dealt with. The principle that the needs of both parties must be met is always fundamental. Therefore, if the inherited assets are required to meet the parties’ needs, the court has the discretion to make such an order. However, where the inherited non-matrimonial assets are not required to meet the needs of the other party, Lord Nicholls’ statement in White v White is followed by the courts: “In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it.” 

Unfortunately, there can be no guarantees when it comes to the ring-fencing of inherited assets. Either way, dealing with non-matrimonial assets such as inheritance can be very complex. If you are concerned about your inheritance and non-matrimonial assets, the best recommendation would be to get specialist legal advice.

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