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Posted 20 January 2017
by Tracy Lambert

Inherited Wealth in Matrimonial Cases



We are often asked to advise clients in relation to their financial situation where a substantial sum has been inherited from a relative. Should this inherited wealth be considered a “matrimonial asset” or should it be “ring-fenced”

The answer to this question depends very much upon the parties financial circumstances.

Essentially we must look at the provisions of section 25 of the Matrimonial Causes Act 1973 as this imposes a duty on the court to “have regard to all the circumstances” of the case.

The statute lists a number of factors which must be taken into account to determine the financial settlement of the parties. The first consideration is always the welfare of any dependent child.

The other factors, such as the financial resources of each of the parties and the weight to be placed upon them will vary depending upon the individual case. The court has a discretion as to how to apply the criteria with the overall aim of achieving a just and fair outcome for the parties.

Accordingly any inherited wealth must be taken into account, but the fact that it is inherited will mean that it is treated differently. For example the nature and origin of the asset may be a reason for treating it differently.

Timing is also a critical factor, that is when the inheritance was received by the party, the longer it has been utilised within the marriage then the less likely that it will be excluded. The court would also look at how the inherited wealth been used within the marriage. The term “intermingling” is often used to describe how the inheritance has been used.

Judges are asked to be “cautious” before bringing inherited wealth into the pot but in some cases there are insufficient assets to be able to exclude it and therefore the parties “needs” mean that some account must be taken of the inheritance.

Overall the court must carry out a balancing exercise so as to achieve overall fairness.

 

For specialist advice on matrimonial matters please contact Tracy Lambert and the Family Team at Tozers LLP, Broadwalk House, Southernhay West, Exeter, EX1 1UA. Direct dial : 01392 667685. Email : t.lambert@tozers.co.uk.

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About the author

Tracy Lambert

Partner

Partner based in Exeter's family team