Inheritance in Divorce – Legal Implications and the Role of Family Mediation
Is Inheritance Considered an Asset in a Divorce?
In the UK, inheritance is not automatically classified as a matrimonial asset subject to division upon divorce. It is generally regarded as a separate asset, belonging to the individual who received it. However, there are important exceptions to this general rule.
Key Factors Influencing the Treatment of Inheritance
Timing Matters: The timing of when the inheritance was received plays a significant role. If inherited assets came into the marriage or were received during it, they may be more likely to be viewed as matrimonial assets and subject to division. If inherited after the marriage has broken down, they often remain separate property.
Commingling of Assets: Combining inherited funds with joint assets or using them for the benefit of the family can blur the line between separate and marital assets. Commingling may lead to inherited assets being considered part of the marital pot. For example, you may pay off part of the mortgage with the inherited funds or build an extension to the marital home.
“Commingling – the act of blending or merging separate funds or properties into a shared or common fund.”
Financial Needs and Contributions: The financial needs of both parties and their contributions to the marriage are considered. If one party can demonstrate a need for the inheritance to meet their financial requirements, the court may consider it in the financial settlement.
Duration of the Marriage: Shorter marriages may be less likely to treat inherited assets as marital property, while in long marriages, there’s a greater likelihood of inherited assets being included in the settlement.
Prenuptial Agreements: Prenuptial agreements can significantly influence the treatment of inheritance. A well-drafted prenup can specify how inherited assets should be handled in the event of a divorce.
Are there any Exceptions?
There are instances where an inheritance may be considered a marital asset:
Shared Inheritance: If both spouses receive an inheritance together, it’s challenging to argue that it’s not a marital asset. The court typically views it as part of the joint assets to be divided.
Gifted Inheritance: If one spouse received an inheritance and then gifted a portion of it to the other spouse, this can complicate matters. The court may view the gifted amount as a marital asset, especially if it was used for the family’s benefit.
Standard of Living: If inherited assets played a significant role in maintaining the family’s standard of living during the marriage, they may be more likely to be considered marital assets.
Family Mediation: A Valuable Tool in Divorce
Family mediation is a constructive and often more amicable approach to resolving disputes, including those related to the division of assets in a divorce. Here’s how it can help:
Open Communication: Family Mediation provides a platform for both parties to express their concerns and interests openly, fostering a better understanding of each other’s perspectives.
Tailored Solutions: Family Mediators help couples find personalised solutions that consider their unique circumstances and priorities, often resulting in more satisfactory outcomes than court-imposed decisions.
Cost-Effective: Family Mediation is usually less costly than protracted legal battles, making it a practical choice for couples seeking a more financially efficient divorce process.
Less Stressful: The mediation process is generally less adversarial and confrontational, reducing the emotional toll often associated with divorce.
Conclusion
Any inheritance, or inheritance that is about to be received (ie. if the person has recently passed) must be disclosed in the financial disclosure. Future inheritance, where the donor has not passed, is not disclosed or taken into account.
Family mediation can be a helpful tool in navigating these complex issues, promoting open communication, and facilitating mutually agreeable solutions. If you’re facing a divorce involving inheritance, it is recommended you seek legal advice before moving forward.
