How to Protect Inheritance from Divorce

Inheritances often represent not just significant financial value but also important family legacies and emotional connections to loved ones. When divorce occurs, protecting inherited assets becomes a key concern for many people. Unlike regular marital assets, inheritances occupy a special position in divorce proceedings, but without proper planning, they can still be vulnerable to division.

This guide explains how inheritances are treated in UK divorce cases and outlines practical strategies to help protect these assets, whether you’ve already received an inheritance or anticipate receiving one in the future.

How Inheritances Are Treated in UK Divorce Law

Under English and Welsh law, the court has broad discretion to divide all assets during divorce, with the primary objective of achieving a fair outcome. While inheritances are not automatically excluded from this process, they are often treated differently from assets accumulated during the marriage.

The Starting Position: Non-Matrimonial Assets

Inheritances are generally considered “non-matrimonial assets” – property that has not been generated by the efforts of the marriage partnership. The courts typically approach non-matrimonial assets with these principles:

• They are not automatically subject to the equal sharing principle that applies to matrimonial assets
• The longer they have been held during the marriage, the weaker their protection becomes
• If they have been mingled with family assets or used for family purposes, their separate character may be lost
• They remain relevant to the overall financial picture and can be divided if necessary to meet needs

The Needs Principle: The Primary Limitation

The most important limitation on protecting inheritances is the “needs principle.” If the financial needs of either spouse or any children cannot be met without using inherited assets, the court will not hesitate to include them in the financial settlement. Needs in this context are interpreted relative to the Section 25 (MCA 1973) criteria, in particular::

• The standard of living enjoyed during the marriage
• The length of the marriage
• The age and health of the parties
• Childcare responsibilities
• Earning capacity of each party

This means that in cases where other assets are insufficient to meet needs, an inheritance may be partially or wholly divided regardless of its origin or when it was received.

Timing and Treatment of Inheritances

When an inheritance is received significantly affects how protected it may be:

Pre-Marital Inheritances

Inheritances received before marriage generally have stronger protection, especially if:

• They have been kept separate throughout the marriage
• The marriage was relatively short
• They have not been relied upon for family finances
• There is a generational aspect to them

However, even pre-marital inheritances can lose protection if they have been used to purchase the family home or otherwise integrated into family finances.

Inheritances During Marriage

Inheritances received during marriage are still considered non-matrimonial assets but may have less protection than pre-marital inheritances. The court will consider:

• How long ago the inheritance was received
• Whether it has been kept separate or mingled with family assets
• The extent to which both spouses have benefited from it
• Whether there was a clear intention for it to benefit only one spouse

Post-Separation Inheritances

Inheritances received after separation but before financial settlement are generally better protected, as there has been no opportunity for the inheritance to become entangled in family finances or the non-receiving spouse to have contributed to it’s retention. However, they remain relevant to the overall financial picture and may still influence the court’s decision if needs cannot otherwise be met.

Future Inheritances

Expected but not-yet-received inheritances are generally not included in financial settlements unless they are imminent and certain. However, significant potential inheritances may sometimes influence the court’s approach to achieving fairness.

Practical Strategies to Protect Inheritance

There are several effective strategies to protect inheritances from divorce, with varying levels of security:

1. Prenuptial and Postnuptial Agreements

One of the strongest protections for inheritances is a properly drafted marital agreement:

Prenuptial agreements are made before marriage and can specifically ring-fence existing or anticipated inheritances. Since the landmark Radmacher v Granatino case in 2010, prenuptial agreements have gained significant weight in UK courts when:

• Both parties have received independent legal advice
• Full financial disclosure has occurred
• The agreement is fair and does not leave either party in need
• It was signed well in advance of the wedding (ideally at least 28 days)

Postnuptial agreements are made during marriage and can be particularly useful when an inheritance is received after the wedding. They function similarly to prenuptial agreements but may be entered into at any point during the marriage.

While neither agreement is automatically binding, courts give substantial weight to properly executed marital agreements that specifically address the treatment of inheritances in the event of divorce.

It is vital to keep any nuptial agreement under review, particularly when there is a significant event on the horizon or if one has occurred, such as inheritance and the birth of a child.   

2. Family Trust Structures

Placing inheritances in trust structures can provide significant protection:

Discretionary trusts are particularly effective because:

• The beneficiary doesn’t legally own the assets (the trustees do)
• The beneficiary only has a hope or expectation of benefit, not an absolute right
• The trustees control when and how much benefit is provided
• The assets may remain outside the divorce court’s direct reach

For maximum protection, such trusts should:

• Be established by the person leaving the inheritance (rather than the beneficiary)
• Include multiple beneficiaries (not just the married individual)
• Give genuine discretion to trustees who are independent
• Be created well before any marital difficulties arise

3. Keeping Inheritance Separate

Maintaining clear separation between inherited assets and marital assets can provide some protection:

• Hold inherited assets in separate accounts solely in your name
• Maintain clear records documenting the source of the inheritance
• Avoid using inherited funds for family purposes like mortgage payments or renovations
• Consider creating a paper trail acknowledging your spouse’s understanding that the inheritance is not intended to be shared

This approach is most effective for shorter marriages where needs can be met from other assets, but provides less robust protection than formal agreements or trust structures.

4. Careful Estate Planning by the Donor

If you are leaving an inheritance to someone who may face divorce, consider:

• Creating a well-structured discretionary trust rather than making an outright gift
• Including a letter of wishes that clearly states your intention for the inheritance to benefit only your family member
• Appointing independent trustees who will act in accordance with your wishes

This proactive approach can provide significant protection before the inheritance even passes to your beneficiary.

Specific Considerations for Different Types of Inheritance

Different types of inherited assets require specific protection strategies:

Property and Real Estate

For inherited property:

• Consider maintaining separate ownership rather than transferring into joint names
• If the property becomes the family home, a declaration of trust can record the special status of your contribution.  The family home is rarely considered non-matrimonial property/ringfenced
• For investment properties, maintain separate accounting for all income and expenses
• Consider transferring inherited property into a trust before marriage

Liquid Assets and Investments

For inherited cash or investments:

• Maintain in separate accounts with clear documentation
• Consider “ring-fencing” through formal agreements
• Avoid using these funds for family expenses or joint investments

Family Heirlooms and Chattels

For inherited items of sentimental value:

• Keep detailed records and photographs documenting their source
• Consider formal agreements specifically listing these items as excluded property

Special Situation: Inheritances and International Elements

For international families, inheritance protection becomes more complex:

• Different countries have varying approaches to protecting inheritances in divorce
• The jurisdiction where divorce occurs can significantly impact how inheritances are treated
• Assets located in different countries may be subject to different legal regimes
• International prenuptial agreements require careful drafting to be effective across borders

If your situation involves international elements, specialist advice is essential to navigate these complexities.

How RLK Solicitors Can Help

At RLK Solicitors, our family law team has extensive experience helping clients protect inherited assets before, during, and after marriage. We provide:

• Strategic advice on the most effective protection mechanisms for your specific circumstances
• Drafting of robust prenuptial and postnuptial agreements with specific inheritance provisions
• Coordination with trust specialists and financial advisors to create comprehensive protection structures
• Representation in divorce proceedings where inheritance protection is a key concern
• Practical guidance on maintaining appropriate boundaries between inherited and marital assets

Whether you’re planning marriage, have recently received an inheritance, or are facing divorce with inherited assets at stake, our team can help you implement effective protection strategies tailored to your unique situation.

Next Steps

If you’re concerned about protecting an inheritance from divorce – whether your own or someone you intend to benefit – contact RLK Solicitors for expert advice. Our specialist team will help you understand the options available and develop a strategy that offers the strongest possible protection for these important assets.

Call us on 0121 450 7800 or email enquiries@rlksolicitors.com to arrange a consultation.