Inheritance and Divorce
Inheritance and Divorce UK – How does it work?
In general, assets acquired by you and your partner during the marriage or civil partnership, are added together, and the idea is to divide them equally when the relationship breaks down, and you end your marriage / or civil partnership by way of divorcing yourselves from the relationship. The idea is to split assets equally between the parties.
Is inherited property protected in a divorce?
Unfortunately inherited property is not protected from distribution in all cases when a relationship breaks up, and the parties divorce.
Supposing your parents die, leaving several properties and much cash to you in their wills. You then marry but after some years divorce. There is insufficient income or other assets that you and your partner (married or civil) have accumulated during the marriage to bring about a fair settlement, to place both of you, as far as possible in the same position as you would have been in financially, had the relationship not broken down, this intention is what the current law endeavours to achieve in section 25 of the Matrimonial Causes Act 1973.
In the above circumstances regrettably, inherited property which perhaps your parents never thought would come into the possession of anyone other than yourself can be treated as a matrimonial asset if the parties’ needs’ require funding to meet housing or income needs on divorce.
It is more likely; therefore, that inherited property will be ring-fenced and protected if they have always been treated and kept separate from matrimonial life, and are not required to meet the parties’ needs on divorce. The logic behind this was set out in the case of White v White 26th October 2000, Judicial Committee of the House of Lords.
What if the marriage is one of long as opposed to short-duration or where matrimonial assets are mixed with inherited property?
Where the marriage has been a long one, say of 20 years or so duration for example, and the parties have inherited property, that passage of time may gradually be seen as having converted ring-fenced property into matrimonial property. See the case of Miller v Miller, for example, 2006 House of Lords.There may also be cases where matrimonial and inherited property are mixed during the marriage. For example, some inherited cash may be used for the benefit of the family during the course of the marriage in the purchase of a holiday home, or inherited property may itself be used as a second home of the parties, and in these circumstances it is more likely than not that the assets together will form part of the matrimonial pot ready for distribution either equally between the parties or according to their needs, taking into account all the circumstances including the best interest of any children of the marriage. See the case of K v L  EWCA Civ 550.
What safeguards are there to protect inherited property?
Prenuptial and indeed postnuptial agreements can assist provided both parties have taken proper independent legal advice, and there has been transparency in terms of the disclosure of assets by the parties. The courts will take more notice of them in considering the intention of the parties if there has been transparency. See Radmacher v Radmacher Supreme Court 2010.
A party may decide to make a will as to the direction of inherited property, and if future inherited property is envisaged from a relative one day, then expert advice should be obtained on trusts and estate planning which can help to keep inherited assets safe in the event of a divorce.