Matrimonial finance: Is my inheritance protected?
‘A PRENUP OR POST-NUPTIAL AGREEMENT CAN GIVE SOME SECURITY’
COUPLES divorce for many reasons and family lawyers have predicted queries could rise in the wake of lockdown.
This prediction could well be coming true. In June 2021, the Ministry of Justice (MoJ) revealed that from January to March 2021, there were 30,420 divorce petitions, up by 2 per cent on the previous quarter in 2020.
In September 2021, the MoJ published its April to June 2021 statistics, which found there were 26,301 divorce petitions, with matrimonial cases up 7 per cent.
These high statistics could be due to the delays in the court system caused at the start of the pandemic, resulting in the court backlogs which grew in successive lockdowns.
In 2020, HM Courts & Tribunal Service (HMCTS) announced that even if the number of days that judges sit are sustained for the remaining financial year so that the number of concluded cases improve and face-to-face hearings are increased, the backlogs are still due to grow in family law.
HMCTS predicted it may take three years before the backlog returns to pre-crisis levels.
It was also reported that between July 2020 and July 2021, Citizens Advice said the divorce section of its website was visited 419,359 times – a 14 per cent increase on the previous year.
If couples do decide to divorce, what do they need to know about how assets are divided? How is inherited wealth considered by the courts? How can inheritance be protected?
When couples divorce, their assets are either classed as “non-matrimonial assets” which is
property and money from a source outside the marriage, or “matrimonial assets”, which is property and money acquired during your marriage.
In most cases, the family home will be treated as a matrimonial asset. In England and Wales, matrimonial assets automatically go into the asset ‘pot’ to be divided between the divorcing couple.
Inherited assets aren’t automatically excluded from the matrimonial assets pot. It depends on the specifics of your case if your inheritance is shared.
In order to decide if inheritance should be added to the matrimonial pot, the court will look at the couples’ financial needs – as defined under the Matrimonial Causes Act 1973 – which considers the financial needs of any child and the financial needs, obligations and responsibilities which each of the parties is likely to have in the foreseeable future.
If the matrimonial property isn’t sufficient, then the non-matrimonial property, including inheritance, is added to the overall matrimonial pot to cover the financial needs of both parties after
the divorce.
Should I get a prenup or postnup? A pre-nuptial agreement is a legal deed couples can enter into before marriage, which outlines what will happen to their respective property and finances in case of divorce.
A post-nuptial agreement is essentially the same as a prenup, but it is agreed during the marriage not before. Such an agreement can give an individual some protection of all of their property – including inherited assets. The agreement can make it clear what should happen to the assets in the event of divorce. However, there is no guarantee, and each case will be dealt with on its facts.
Is my spouse inheritance?
entitled to my
If, for example, an Asian woman inherits substantial wealth from her parents, what right does her spouse have to it during the divorce process?
Opinions differ as to whether inheritance should be shared between divorcing couples and there are many legalities concerning these issues, so it is not a simple answer.
Some feel that, even though they’re divorcing, their spouse is entitled to an adequate share of the inheritance, while others believe it is theirs to keep as it has been passed on to them from a family member. Again, the particular facts of each case are likely to be relevant and it is important to obtain legal advice.
Whatever’s decided, it is vital to obtain a clean break consent order, which means that after your divorce you have no financial ties to your ex-partner and he/she can make no further claim against you.
If you’re thinking about divorcing your spouse and are concerned about your inheritance, it is best to get specialist advice from a family law solicitor, who can advise you on how to protect your assets. You can use the Find a Solicitor section on the Law Society website: solicitors.lawsociety.org.uk/?Pro=True
Lubna Shuja is the vice-president of the Law Society of England and Wales. She will become the first Asian president in October 2022 and the seventh female president when she takes office.