The starting point on divorce is that the assets acquired during the marriage fall into the ‘matrimonial pot’ and will be divided equally between the parties. This is called the sharing principle.
However, in certain circumstances an inheritance will be a relevant contribution and a good reason to depart from an equal division.
Matrimonial and non-matrimonial assets
The court will distinguish between matrimonial (assets acquired during the marriage through the joint efforts of the parties) and non-matrimonial assets (those acquired prior to marriage, post separation or received through an inheritance). In White v White  UKHK 54 it was recognised that a party should be allowed to keep his non-matrimonial property, brought into the marriage or inherited or gifted to him during the marriage if the other party’s financial needs could be met without recourse to the non-matrimonial assets.
The weight the court attribute to the existence of non-matrimonial property can depend on the way the parties have organised their financial affairs and the time that has elapsed since the property was acquired. The longer the marriage the more likely non-matrimonial property will become merged and entangled with matrimonial property. For example, if an inheritance has been used to renovate the matrimonial home, an argument that this investment should be returned because the source was an inheritance may not get far, especially if the property is owned in joint names.
Strategies to protect inheritance
- A pre or post nuptial agreement can record what assets are matrimonial or non-matrimonial and whether the sharing principle will apply on divorce.
- Do not intermingle your inheritance. Keep it separate and apart and do not use it for the benefit of both parties to the marriage.
- Keep records. Maintain records to demonstrate the original source of the funds and to demonstrate that it has not been intermingled with the family finances.
- Let your financial advisor know. Your financial advisor may otherwise advise you to put assets in your joint names or even transfer them to the sole name of your spouse.
- Take legal advice. A family lawyer will be able to advise you on the likely approach of the court to your inheritance and help you reach a fair outcome.