Being named as the beneficiary of a will can be a life-changing experience. Whether you receive cash savings, valuable heirlooms, life insurance proceeds, property titles or other assets, an inheritance can transform your quality of life and the level of comfort you enjoy.
Leaving an inheritance is often the last loving action taken by a parent, relative or close friend who wants you to benefit from the wealth they leave behind after their death.
If the majority of your wealth is inherited and you’re either in the process of or thinking of divorcing your spouse, the question “Do I have to share my inheritance with my spouse?” will likely be on your mind.
The answer to this question is quite complicated for a few reasons.
For all of these reasons, it’s understandable to want to ringfence your inherited wealth when separating from a spouse. In this guide, we’ll look at the rules surrounding inheritance and divorce UK couples should follow when a relationship comes to an end, and how professional financial mediation can help.
Several factors combine to determine what happens to inheritance once divorced. To begin with, there are three ‘when’ scenarios:
Scenarios 1 and 2 are treated largely the same and will be discussed after this section.
If you find yourself in scenario 3, please click here to jump to ‘How does future inheritance work in divorce?’
In scenarios 1 and 2, the answer to the burning question, “Do I have to share my inheritance with my spouse?”, depends on whether the money and/or assets have entered the marital pot.
For inheritance and divorce UK rules typically default to viewing inherited ‘property’ (i.e. money and assets) as non-marital or non-matrimonial property. This means that your spouse is not automatically entitled to a split of any legacy bequeathed to you.
However, inherited funds can enter the matrimonial pot if you have shared them with your spouse or used them for mutual benefit within your marriage.
Examples of this include:
It’s not always clear-cut. Decisions made in court can be influenced by the duration of the marriage, exactly when you received the inheritance, and the needs of the involved parties (i.e. you, your spouse and any dependents).
There are several ways to protect your inheritance before, during and after divorce. In general, it is better to take action as early as possible to avoid accidentally mingling your inheritance with the matrimonial pot in the ways described above.
The good news is that inherited property is typically considered to be non-marital property by default. As such, protecting it means making sure that it keeps that status during your divorce.
Some ways you can do this include:
All of these are ways to ‘ringfence’ the inheritance, so that there is no reasonable legal view to consider it part of your marital finances. However, this still does not 100% guarantee that your spouse will not be able to claim a share of your inheritance.
Even if you have taken the necessary steps to ringfence your inheritance, the courts may award some of it to your spouse.
When considering inheritance and divorce UK courts will prioritise the needs of both parties. This may lead them to award some of your inheritance to your spouse, if for example:
The court may take into account whether or not you disclosed your inheritance to your spouse (e.g. when negotiating a prenuptial agreement) especially if you were already aware of a substantial sum of cash or assets left to you.
So far, we have talked about inheritances received before or during the marriage. Scenario 3 is when you stand to inherit after your divorce is finalised. There are specific risks to be aware of in this circumstance.
First, there is the expectation of an impending inheritance. If you have an extremely elderly or unwell parent, with the reasonable expectation that they will die very soon after your divorce, the courts may deem that the value of that inheritance is a marital property.
If you are in an ongoing maintenance payment arrangement with your ex-spouse after divorce, and your circumstances change significantly – e.g. due to a substantial inheritance – then you could find yourself facing a claim from your ex to increase your maintenance payments.
Finally, if you never committed to a binding financial settlement with a clean break order, there is nothing to stop your ex from coming back after several years or more, to make a fresh claim against your inheritance.
This is why it’s essential to finalise your divorce including your financial settlement, so that both parties can move on with no lingering obligations to one another.
Honest and open disclosure is essential to protect your inheritance and prevent any future legal claims against your property by an ex-spouse.
This is particularly the case during any legal proceedings, such as negotiations over a prenuptial arrangement, or during divorce itself. You should be open about any inheritance you have received in the past, or which you expect to receive in the future.
Failure to disclose your full personal wealth could be seen as an attempt to deceive your spouse, as a way to reduce the financial settlement and/or maintenance payments they ask for during the divorce.
By being honest throughout, you demonstrate good faith in the proceedings and remove some of the reasons why the courts might decide to intervene and award some of your inheritance to your spouse.
These are some of the most asked questions surrounding inheritance and divorce UK couples will encounter during their separation process:
Marital assets are co-owned (e.g. a joint account or a property in both spouses’ names) or are used to fund the marriage (e.g. assets sold to clear joint debts). Inheritance is normally a non-marital asset by default, but can become marital property in a variety of ways.
If your divorce is finalised, including a financial settlement with a clean break order, there should be no legal reason to inform your ex. If you never signed a clean break order, your ex may have a claim to a share of the inheritance, so the usual disclosure rules will apply.
Usually no. If you haven’t yet received the inheritance, it is not strictly part of the marital finances. However, if it is clear that you will receive a sizeable inheritance in the near future, the court may take this into consideration when setting the levels of financial awards and maintenance payments made to your spouse.
It is very likely that the inheritance (or the portion used to purchase the asset) has become marital property. As such, the value of the joint asset will usually form part of the marital finances to be shared on divorce. It is very unlikely that you will be able to claim sole ownership of a joint asset based on using inherited funds to purchase it.
Again, this depends on whether the assets are deemed to be marital property. If you inherited the assets and did not use them to support your married lifestyle (e.g. you did not use an inherited property as the family home), then you have a stronger argument as to why your spouse should not be entitled to a share.
Yes. All of the above guidance applies, but if you are married, have separated, and have not divorced (complete with financial settlement and clean break order) then your ex-spouse will typically have a claim to a share of any marital property, which could include some or all of your inheritance.
Again, this depends on whether you finalise your divorce. Simply separating or living apart does not end your legal contract of marriage. If you die without a will, your legal spouse stands to inherit your entire estate by default.
They could also contest a will to try to claim a share of your estate. A clean break order is crucial to end their right to claim some or all of your inheritance after death.
Inheritance and divorce are complex subjects, and personal circumstances can make it difficult to give general guidance in an article like this one. That’s why it’s so important to work with an experienced financial mediator like Marcia Mediation.
We can work with you to help you understand your rights and responsibilities during divorce. We can help you with the disclosure of inherited assets and determining which are marital or non-marital property.
Importantly, we represent the best interests of all parties. We will seek a fair and balanced outcome, which respects the status of any inherited finances. We can help you to reach a financial settlement that can be enforced by the courts, complete with a clean break order.
By doing this, we ensure that you do not have any lingering obligations to your spouse, so that they cannot make further claims against your inheritance, or claim against your estate in the event of your death.
We understand that inheritances can carry strong emotions, especially if you have only just received a loving legacy. Our financial mediators are kind and compassionate. We have your best interests at heart, along with the ambition for a brighter future after divorce.
If you have any questions, call us on 0330 236 7450 or fill out this form
