What happens to my inheritance if I divorce?

Understandably many people believe that they are entitled to keep inheritance brought into the marriage or received during the marriage from an external source. Unfortunately, the law is not so clear-cut, with each case turning on its own facts.

In this article, family partner Grainne Fahy and associate Yasmin Khan-Gunns explain what the courts will consider and outline what happens to the inheritance of a party in a divorce.

Identification of property

When considering the financial division of assets on divorce, the courts need to identify the matrimonial and non-matrimonial property.

Matrimonial property is property acquired during the marriage by the labours or endeavours of one or both parties. This usually includes the family home regardless of when or how or by which party it was acquired, as it usually has a central place in any marriage. Whereas non-matrimonial property is property that has been acquired by one of the parties outside of the marriage, including inheritances, gifts and property which either party brings into the marriage with them.

Distribution

Once the courts have identified the matrimonial and non-matrimonial property, they then need to distribute it.

Matrimonial property is likely to be shared equally between the parties, whereas non-matrimonial property is likely to be retained by the contributor, particularly where the marriage is short, or shared unequally in favour of the contributor on the basis that it represents an unmatched contribution from them.

However, the distinction between matrimonial and non-matrimonial property will carry little weight, if any, where the parties’ financial needs cannot be met without resource to the non-matrimonial property, as needs have priority. The distinction may also carry less weight if the non-matrimonial property is or was of insignificant value, was acquired many years ago or has been intermingled with other matrimonial property during the marriage – for example, if inheritance monies were used to purchase a property in joint names or were moved into a joint account.

The above said, the court’s approach to non-matrimonial property is not defined by one clear principle. The court will need to consider all of the circumstances of the case and whether the distribution is fair; fairness being the court’s overarching objective.

Future inheritance

The court rarely takes into account prospective future inheritances, as it is difficult to predict how long a person will live and how large the potential benefit will be. The position may be different if the inheritance is imminent or would make a substantial difference. If this is the case, the court may adjourn proceedings until the inheritance is available for consideration. The position may also be different if one party receives a substantial inheritance after the court has made a final order, in which case the other party may decide to apply back to the court on the basis that an event has occurred which invalidates the fundamental assumption of the order made (a Barder event).

Whilst you cannot be sure that your inheritance will be protected on divorce, it is important that you seek independent legal advice as to what you can do to help secure it, for example entering into a pre-nuptial or post-nuptial agreement and ensuring that you do not mingle your inheritance with matrimonial property.

If you are concerned about how a divorce will impact your inheritance, please contact Grainne Fahy and Yasmin Khan-Gunns.