Protecting Inheritance in Divorce
An inheritance can hold financial and personal importance. If you are separating or considering divorce, you may be concerned about property, savings, investments, family assets or money received from a relative. NLS can help you understand the financial issues that may need to be addressed and consider the options available in your circumstances. Please note that we do not offer legal aid for private divorce and financial matters.
Understand how inherited assets may fit into your wider financial arrangements.
Shabana Sultana
Inheritance and divorce financial arrangements
There is no single answer to how inheritance will be treated on divorce. The approach will depend on the circumstances of the marriage, the financial resources available, the needs of the family and the other matters that need to be resolved.
An inheritance may have been received before the marriage, during the relationship or after separation. It may be held as savings or investments, used to buy or improve a property, placed in a trust, or connected to a family business. Each of these circumstances can raise different questions.
When considering financial arrangements, the court must take account of all the circumstances of the case, including each person’s income, earning capacity, property and other financial resources.
Understanding what needs to be considered
Protecting an inheritance is not simply about identifying where the money came from. It can also be important to understand how it has been used and how it fits within the wider financial position.
Questions that may need to be considered include:
- Whether the inheritance has been kept separate or mixed with shared finances
- Whether it was used towards a family home, other property or major expenditure
- Whether it is held as cash, investments, land, business interests or through a trust
- Whether there are other assets, income, pensions or liabilities to consider
- The housing and financial needs of each person and any children
- Whether a future inheritance is expected but has not yet been received
The right approach will depend on the information available and the wider circumstances of the family. NLS can help you identify the issues that may need to be addressed before decisions are made.
Inherited property and family homes
An inherited property can raise particular questions during divorce. It may be a home that one person owned before the marriage, a property inherited during the relationship, an investment property or land that has remained within a family.
The way the property has been used can be important. For example, it may have become the family home, generated rental income, been improved using shared funds or been kept separate from the couple’s day-to-day finances.
It is important to understand the ownership structure, any mortgage or borrowing, the source of contributions and the practical role the property plays in each person’s financial circumstances.
Inherited savings, investments and family assets
Inheritance can take many forms. It may include savings, shares, investments, valuable possessions, land, a share in a business or assets held through a family arrangement.
Where finances are more complex, it can help to build a clear picture of the assets, their value, how they are held and any associated liabilities. This may be particularly relevant where inheritance is connected to a trust, a family company, several properties or assets held outside the UK.
NLS can help you understand the financial information that may be relevant and how inheritance sits alongside the rest of the financial arrangements.
Financial disclosure and clear information
Before financial arrangements can be properly considered, both people need a clear picture of the finances. This can include property, income, savings, investments, pensions, debts and other financial resources.
Where a financial remedy case is contested, Form E is used to provide detailed financial information to the court and the other person.
Accurate information can help identify the issues that need to be resolved, including questions about inherited assets. It can also support informed discussions about whether an agreement may be possible.
Reaching a financial agreement
Some separating couples are able to agree how finances will be dealt with after they have exchanged the relevant information and considered the issues carefully.
A financial agreement may address property, pensions, savings, investments and maintenance. If an agreement is reached, a consent order can be used to ask the court to make it legally binding.
An agreement should reflect the circumstances of the people involved. It is important not to assume that a particular arrangement will be suitable simply because an asset was inherited or held in one person’s name.
When agreement cannot be reached
If you cannot agree on financial arrangements, it may be necessary to ask the court to make a financial order. GOV.UK confirms that financial orders can deal with property, pensions, savings, investments and maintenance.
A court process can involve financial disclosure, settlement discussions and, where necessary, hearings. NLS can explain the options available and help you understand the next steps that may be appropriate.
Shabana Sultana - Head of Private Family Law
Shabana has spent more than 26 years working solely in family law and can conduct with confidence all private family cases of every description. She specialises in financial matters following divorce and private Children’s matters with a focus on international child relocation cases are the heart of her practice. She is a natural problem solver always thinking creatively and outside the box to achieve successful outcomes for her clients. Her clients praise her for being a master negotiating who is never phased by the noise of her opponents, and this has meant she can boast a strong record of achieving out of court settlements.
Shabana works alongside an impressive team of carefully selected experts who lead with discretion and expertise including accountants, auditors, from pension actuaries to surveyors and private investigators. Twenty-six years in practice have given her a strong network of family law barristers who time after time deliver the results her clients want.
Planning ahead to protect future interests
If you are planning to marry or enter a civil partnership, a pre-nuptial agreement can provide a structured way to discuss financial arrangements and future expectations. A post-nuptial agreement may be considered after marriage or civil partnership.
These agreements can be relevant where one person has inherited assets, expects to receive family wealth or wants to discuss how property, savings, investments or business interests should be treated in future. Their effect will depend on the terms of the agreement and the circumstances in which it was made.
For more information, visit our nuptial agreements page.
How NLS can help with inheritance and divorce
The NLS Private Law department can help you to:
- Understand the financial issues that may arise where inheritance is involved
- Consider inherited property, savings, investments, trusts, business interests and other assets
- Prepare for financial disclosure and discussions about settlement
- Understand the options available if agreement cannot be reached
- Consider whether a nuptial agreement may be relevant to future planning
Book Your Free No Obligation Call
Contact NLS to discuss your circumstances. Evening and weekend appointments available.
Protecting Inheritance FAQs
- Is inheritance always protected in a divorce?
No. You should not assume that inheritance will automatically be kept separate or automatically shared. The outcome will depend on the circumstances, the financial resources available and the issues that need to be resolved.
- Does it matter when I received the inheritance?
It can be important whether an inheritance was received before marriage, during the relationship, after separation or is expected in the future. How it has been used may also be relevant to the wider financial arrangements.
- What if I used inheritance to buy or improve our home?
Using inherited money towards a family home or property can raise further questions about how the asset fits within the overall financial position. The ownership arrangements, financial contributions and family circumstances may all need to be considered.
- Do I need to disclose an inheritance during divorce?
Financial arrangements require a clear understanding of each person’s financial position. In contested financial remedy proceedings, Form E is used to provide detailed financial information to the court and the other person.
- Can a pre-nuptial agreement protect inheritance?
A pre-nuptial agreement can help couples discuss how they intend to approach financial arrangements, including inherited assets or expected family wealth. Its effect will depend on the agreement and the circumstances in which it was made.
- What if my inheritance is held in a trust?
Trust arrangements can add complexity to divorce financial discussions. It is important to understand the nature of the trust, the assets involved and how it relates to the wider financial circumstances.
- Can we agree how inherited assets will be treated?
Some couples are able to reach an agreement about their finances. If an agreement is reached, a consent order can be used to ask the court to make it legally binding.
- What if we cannot agree about inheritance and other assets?
If agreement cannot be reached, you may need to consider a financial order application. The court process can involve financial disclosure, further discussions and hearings where required.