If you have received an inheritance from a family member or friend, or you believe you may in the future, you may, understandably, be concerned that it may become part of a settlement if you divorce.
It is completely understandable that you want to keep any money, property, and assets you have been bequeathed by your family for you and your loved ones, and not for the benefit of an ex-partner. In this article, we will discuss some of the main ways to safeguard your inherited wealth from divorce in the UK.
Can my partner make a claim against my inheritance in the event of divorce?
Non-matrimonial assets acquired through inheritance are not automatically viewed as joint assets to be divided in the event of divorce or dissolution. This means that any money or assets received from a loved one in their Will or through the rules of intestacy should remain yours and yours only. This is not always the case, however, as the courts sometimes take inheritance received into consideration when making a decision on the division of assets following divorce. This is why it is important to take additional measures to protect your inheritance from divorce.
The courts may take your inheritance into account if your joint marital assets are not enough to meet both of your ‘reasonable’ needs in the event of divorce. Inherited wealth may also become a martial asset if, over time, it is paid into a joint account and used for jointly used assets such as property.
In most cases, if an inheritance is yet to be received when a couple divorces, this will not normally be taken into consideration by the courts when deciding on the division of assets. As with many aspects of divorce law, this is not always the case, however. If, for example, inheritance is expected in the near future because a family member is gravely unwell, and this amount is expected to be substantial, then this may be factored into a divorce settlement by the courts. It may even be the case that the final settlement process is put on hold until the inheritance has been received.
Prenuptial and Postnuptial Agreements
Perhaps one of the most well-known ways to protect inherited wealth is to have a nuptial agreement drawn up between you and your partner. Prenuptial and postnuptial agreements are used to set out how assets owned before and acquired during the marriage (including inheritances) should be divided in the event of divorce or dissolution. Prenuptial agreements are entered into before getting married, and postnuptial agreements are entered into while already married.
When drafting a nuptial agreement, both parties are legally required to make a full disclosure to the other party of their ‘reasonably foreseeable’ inheritance. While nuptial agreements are not technically legally binding in the UK, the courts will take them into account when making a decision on the division of financial assets in a divorce settlement. By instructing a family law Solicitor, you can be assured that your pre or postnuptial agreement will be drawn up correctly and will be considered valid in a court of law. In order for a nuptial agreement to be valid, it must be entered into freely, based on a full disclosure of all assets owned, and the implications of the document must be understood by both parties.
Where possible, it is advisable to keep your inherited and marital assets separate from one another. This can be achieved in a number of ways, including creating a separate bank account or investment portfolio for your inherited funds and assets. Keeping your inherited wealth and your marital finances completely separate will make it much easier to divide your assets with your ex-partner if you divorce.
Other ways to protect your inheritance in the event of divorce
There are several other ways to protect your inheritance following divorce or dissolution, including:
- Updating your Will regularly - All too often, individuals draft a Will but then fail to keep it up to date. It is vital that if you have received an inheritance after you last updated your Will, it should be updated again to clearly state how you want your inheritance to be handled when you die.
- Place your inheritance into Trust - Placing your inheritance into a Trust means that it can be ring-fenced from claims in the future, including from your ex-partner or creditors. Before applying for a Trust, it is important to seek advice from legal and financial experts to understand the most appropriate Trust type for your needs.
- Full financial disclosure – It is extremely important that you fully disclose your inherited assets during the divorce settlement process. This is because if a judge later discovers that you have not made a full and frank disclosure of your entire wealth, they may award your ex-partner a greater proportion. Timely and honest disclosure can help prevent accusations of non-disclosure and enhance the credibility of your financial claims, including the protection of your inheritance.
Protecting your inheritance in the face of divorce requires proactive measures and careful planning. By using nuptial agreements, Wills and Trusts, you can properly safeguard your inherited assets. Remember that each divorce case is unique, and consulting with legal and financial experts will provide tailored strategies to protect your inheritance and secure your financial future.
Pearce Legal has a dedicated team of family law Solicitors who can advise on how you can best protect your inheritance in the event of separation or any other legal matters relating to divorce law. To make an appointment, please contact us on 0121 270 2700 or enquire through our contact form.
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