For many young couples it is a real struggle to get on the property ladder. The combination of rising house prices and stagnant salaries has made the ambition of property ownership an uphill battle for the majority of young married couples. However many of their parents are sitting on wealth tied up in large family homes. At some distant point, there may be a large inheritance.
Inheritance and divorce
When a couple decide to separate and get divorced one of the sensitive topics that has to be raised by a divorce solicitor is whether a husband or wife has any inheritance prospects. The reason that a divorce solicitor will ask such a difficult question is because if the husband and wife want the court to make a financial court order, they both have to give full and frank financial disclosure.
Court rules say that financial disclosure includes giving information if you are the beneficiary of a trust or are due to receive an inheritance.
Do I have to disclose an inheritance in divorce and financial proceedings?
Many spouses worry about the need to give information about a potential inheritance. There is no need to worry or be concerned about future inheritance prospects if you are young and anticipate that in the fullness of time you may receive an inheritance from your parents, potentially shared with your siblings.
That is because hopefully the inheritance will not be received for a very long time and of course there are no guarantees that you will receive anything. For example, sadly any inheritance may be eaten up in care home fees or be used up by parents through equity release on the family home to fund their retirement.
If you have received an inheritance or you know that you are going to receive an inheritance as the probate of the deceased estate is being sorted out then you will need to disclose it as part of your financial disclosure .
What happens if I do not disclose an inheritance in divorce and financial proceedings?
If you do not disclose an inheritance as part of your financial disclosure then your husband or wife could say that you have not made full and frank financial disclosure.
If the failure to disclose the inheritance occurs prior to the conclusion of financial court proceedings, the court could make inferences against you because of the failure to disclose.
If, after a financial court order is made, it becomes known that you had received an inheritance that was not disclosed your spouse could ask the court to set aside the financial court order.
Accordingly, any inheritance should be disclosed. You can then argue that the inheritance is not a ‘’family asset’’ and should not be shared with your spouse.
Prenuptial agreements and inheritance
If you are planning to getting married and you anticipate that either you or your fiancé may inherit money you can draw up a prenuptial agreement to say that neither of you can make a claim against the other’s inheritance.
Although prenuptial agreements are not legally binding, they do carry a lot of weight with the court when a judge is deciding what financial court order to make on divorce.
Postnuptial agreements and inheritance
If you or your spouse receive an inheritance during the marriage then at the time of receiving the inheritance, you can enter into a post nuptial agreement with your spouse.
The postnuptial agreement can say that if you separate they will not make a claim against the money inherited by you and that you will not make a claim against their inheritance or potential inheritance.
For information and advice about inheritance and divorce and financial settlements or prenuptial and postnuptial agreements please call me on +44 (0) 1477 464020 or contact me by email at [email protected]