Inherited assets

Very often when a married couple’s relationship breaks up the question arises: what should happen about money which one of the parties inherited.  What will happen in court is very fact specific.  In other words it varies from case to case.

Where money is inherited it is what the courts would call “non-matrimonial property”.  This is property which has come from somewhere outside the marriage.

Generally speaking where people bring savings into the marriage at the start and use that money to buy a home for them both to live in, that money becomes matrimonial property.  When the marriage breaks up each party will be entitled to a share.  In the case of a short marriage however, it might be that the person who brought in the money would stand a good chance of keeping a large part of it.

An inheritance falls to be considered simply because it is part of the property which each party has.  Remember that under section 25 of The Matrimonial Causes Act the court is to have regard to all of the parties' financial resources.  It is only natural therefore that the court will have regard to property which one party has now even if it is by an inheritance.

If the parties have enough property to meet their reasonable needs without resorting to the inherited assets then it may be that the inherited assets can be “ring-fenced” and the party who inherited them can keep them.

The more difficult cases however, are where the inherited assets are part of a sum of money which is only just enough to meet both parties’ needs.  For example the parties may have a house with £200,000 of equity in it.  Of that, £150,000 might be made up of an inheritance which the Husband received.  In a case where the parties have say 2 young children and the marriage is say 10 years, a court might very well find that it is too bad that the money came from an inheritance and that a large part of the inherited money must be put to use to house the Wife and the children.

Perhaps the leading case regarding how inheritances are to be treated is White v White [2001] 1 A.C. 596.  In that case, when dealing with the issue of inherited assets, Lord Nicholls stated:

“Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property.” [my underlining].





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