What Happens to my Inheritance if I get Divorced?
Just how an inheritance is dealt with in the event of a divorce depends on the circumstances of each individual case. The court may regard it as not relevant or it may be included in the matrimonial property, or asset pool, to be divided up. There are two different types of inheritances to consider. The first one is the most obvious – those inheritances received during the relationship or after separation. The second one is termed a prospective inheritance or a future inheritance.
Received inheritances
How an inheritance is dealt with will depend on when it was received. Was it received during the relationship, or after separation? If it was received during the marriage, it will form part of the asset pool to be divided. The courts will look at two things in determining how much weight to give to this contribution – the size of the inheritance, and how the money was spent. If the money was spent on an asset, does this asset still exist? Was it spent on general living expenses? Or perhaps on a holiday? If an inheritance is received after separation, it may still be included in the asset pool. In general, if the inheritance is large in comparison to the size of the asset pool, then the inheritance is more likely to be included.
Possibility of a future inheritance
For the most part, future inheritances are not considered as property to be taken into consideration when deciding how to divide property in a divorce. However, there is no absolute rule – it can depend on the circumstances.
In White and Tulloch vs White, the husband argued that his ex-wife was expecting to inherit from her mother’s estate. The wife’s mother was aged 81, but was in good health.
In deciding not to include this prospective inheritance in the asset pool, the court took the view that his ex-wife’s mother was not obliged to leave anything to her daughter (although it was likely she would) and in any case, this benefit would probably be eroded over time by events like medical care or other economic uncertainties.
One possible situation where the court may decide to include the future inheritance is where a party to the marriage has contributed to the asset to be inherited.
Such circumstances arose in the case of De Angelis and De Angelis. In this case (as in Tulloch and White) there was an application by the husband to the court regarding his wife’s expected inheritance from his mother-in-law’s estate. The notable difference in De Angelis however is that the husband had worked on the properties thereby increasing their value, and he had not charged his mother-in-law for his labour.
Generally speaking, it is only in extreme cases where a prospective inheritance would be taken into account. In making a decision, the court would consider whether or not the person who has made the will is near death or is in good health. If they are not near death, the inheritance is unlikely to be received for some time, so the courts likely wouldn’t regard it.
However, there is another consideration which may result in the future inheritance being included in the asset pool – the size of it.
If the asset pool is small in comparison, the court may decide to include it. This is to avoid a situation where the non-beneficiary spouse walks away from the marriage with very little.
No one-size-fits-all solution
It is important to consider how the many factors apply to the specific facts of each individual case. When was the inheritance received? What is the size of the inheritance as compared to the asset pool? What is the expectation of the inheritance; how did the parties include it in their financial planning? Did the parties in any way contribute to the inheritance?
The lesson to be learnt is not to rely on rules of thumb, as each case is different. There isn’t any one specific formula the courts will use when it comes to working out who will get what. The judge will use discretion and consider what is fair and just under the circumstances, taking into account how the many factors of the case apply.