Firstly, there is a general principle, even where short marriages or civil partnerships are concerned, that property that has been acquired during the marriage through the joint efforts of the parties should normally be shared equally on divorce.
This includes the family home regardless of how, when or by which party it was acquired. Such property is known as matrimonial property.
What happens to non-matrimonial property is not clear cut and will depend on the facts of the case.In some cases, the courts have to decide how to deal with property – other than the family home – that has been acquired by one of the parties while they were together. This might be money or assets inherited or gifted to a party during the marriage and is referred to as non-matrimonial property.
It is fair to say that generally, and especially in the case of a short marriage, the court starts with the view that a party should be allowed to keep their own non-matrimonial property.
Needs must be met
It is really important to stress that needs are always an extremely important factor.
For example, if a half share of the matrimonial property would not be enough to meet one party’s reasonable needs, including their housing needs, then this might result in that party retaining more than half of the matrimonial property because the other party has recourse to their inheritance, which is a financial resource available to them.
Needs will always take priority as the court considers that each party will need sufficient resources to meet their reasonable financial needs.
The issue as to what happens to non-matrimonial property is not clear cut and will depend on the facts of the case.
For example, a small amount of money inherited at the start of a long marriage, which has either been spent by the parties or has been mixed with matrimonial assets – such as using an inheritance to pay off or reduce the mortgage on the family home – may not be ring-fenced or treated differently from matrimonial assets.
A party might seek to argue that it had become matrimonial property and that it should therefore be shared.Relevant factors can include when it was received during the relationship, how substantial it is compared to the value of the overall matrimonial property and how it has been used.
For example, if the parties generally kept their finances separate and inherited money has always been kept by one party and not shared, it may be more likely to be retained by that party on divorce.
If on the other hand an inheritance was used to buy an investment property and both parties worked on that property and the rental income from it was enjoyed by both of them for their joint benefit during the marriage, then a party might seek to argue that it had become matrimonial property and that it should therefore be shared.
What then would the position be about a potential inheritance? It is often the case on a divorce that one party will claim that in due course the other will inherit money, perhaps on the death of their parents and that this should be taken into account in the divorce settlement.
However, the courts will look at the situation as it is at the time of the divorce, and unless a relative is very ill or has died and it is clear one party to the marriage is likely to benefit in the near future, the court is unlikely to take a potential future inheritance into account.
This is especially so if a relative is still alive as they could always make a new will, providing they have the necessary capacity to do so.
Pre-nup
So what, if anything, can a party to a marriage or civil partnership do to avoid their inheritance being lost on divorce?
While it is always advisable to have a pre-nuptial agreement drawn up before the marriage takes place, if there hasn’t been time to do that you can always enter into a legal agreement after the marriage has taken place.
Taking advice at the time of the inheritance would be wise.This is known as a post-nuptial agreement. This is a legal document entered into by the parties after they have married that sets out what they intend to happen in the event the marriage ends in divorce.
This can be a very useful tool because it will avoid any arguments later on about what the facts were and what was and what was not intended in respect of an inheritance.
The parties will need legal advice on this and they will be advised that it is always necessary to ensure that the reasonable needs of the other party – and of course the needs of any dependent children – have been met, but subject to that, taking advice at the time of the inheritance would be wise.
Not only will this potentially avoid expensive wrangles later on, but both parties could also have a clearer understanding of what is intended to happen in the event the marriage ends in divorce.
Julia Cluley is a family law specialist at Valemus Law
