How to Protect Inherited Assets During Divorce

Inheritance can be a deeply personal matter. It often represents family history, sentimental value or a long-awaited financial gift. Understandably, when facing divorce proceedings one of the biggest concerns for many of my clients is whether their inherited assets will be divided with their spouse. The same issues also arise for those dissolving a civil partnership.

Are inherited assets automatically protected?

One of the questions I am asked most frequently is whether inherited wealth is automatically protected in divorce. The answer is no. Under the Matrimonial Causes Act 1973, judges are given wide discretion when deciding how assets should be divided. While inherited assets can sometimes be treated differently from matrimonial assets such as the family home, joint savings or income built up during the marriage, there is no guarantee they will be excluded.

My clients are often surprised to learn that the court’s priority is always to ensure both parties’ needs, particularly those of any children, are met. If the only way to achieve this is by drawing upon inherited funds, the court may decide to do so.

What the court looks at

The court will first consider whether there are sufficient matrimonial assets in the pot to meet the parties’ needs. If not, then inherited wealth may be invaded if it is the only way to meet housing or income needs. The court will also consider:

The timing of the inheritance: Assets inherited long before or after the marriage are more likely to be treated as non-matrimonial.
How the inheritance was used: Where inherited funds have been kept separate, they are more likely to be excluded. Where they have been used to buy the family home or invested into joint accounts, they are more likely to be treated as shared.
Length of the marriage: In longer marriages, the line between matrimonial and non-matrimonial assets can easily blur.
Future inheritances: Even if money has not yet been received, if there is a strong likelihood of a substantial inheritance in the near future, the court may take this into account.

Insights from my colleagues

As I often say to clients, understanding the law and planning ahead can make all the difference.

My colleague Steven Gasser puts it like this:

“The court’s starting point is always fairness and needs. If the only way to provide a home for both spouses and any children is to draw on inherited wealth, then that inheritance may well come into play. What makes a difference is how the inheritance has been managed, whether it has been kept separate or blended into the couple’s finances.”

I agree completely. In my work I often see clients who could have benefited from advice earlier in the process, before inheritance funds were mixed with joint finances. Having that guidance upfront can make a significant difference to the outcome.

Inheritance also does not always come as a lump sum. It is sometimes left in trust or structured in other ways designed to preserve wealth.

Abigail Bird, Head of our Legacy team, explains:

“Trusts can be an effective way to protect family assets across generations. They do not automatically put inheritance beyond the reach of divorce, but they can add an extra layer of complexity. Courts will look carefully at how much control a beneficiary has and whether the trust income or capital is needed to meet their spouse’s needs. This is why it is vital to align family law and estate planning advice to ensure both the intention behind the inheritance, and the practical needs of the beneficiary are taken into account.”

By working closely with Abigail and our Legacy team I can help clients explore structures and strategies that balance the preservation of family wealth with fairness in family proceedings.

Practical steps I recommend

There is no absolute way to ring-fence inheritance, but the best means of protection is to enter into either a pre-nuptial or post-nuptial agreement with your spouse to set out how the inheritance would be treated if the marriage ends. Additional practical steps which should be taken include:

Keep records: Make sure there is a clear record of when and how you received the inheritance.
Avoid mixing funds: Keep inherited assets separate from joint accounts if possible.
Explore trust structures: Inheritance left in trust can, in some cases, be less vulnerable to division, but this is a complex area where specialist advice is essential.
Review arrangements regularly (including any nuptial agreements entered into): Financial and family circumstances change. What works now may need to be revisited to ensure inheritance remains protected.
Seek advice early: Talking to a family lawyer as soon as possible will give you the best chance of protecting your position.

How I can help

I regularly advise clients on how inheritance is likely to be treated in divorce and the steps they can take to protect it. Every situation is different, and having the right advice at the right time can make all the difference.

At Laurus, our Family Law team works hand in hand with our Legacy department and trusted wealth professionals to provide joined-up advice that reflects both family and financial priorities.

If you are worried about how your inheritance might be treated, or if you would like to put protective measures in place for the future, I would be very happy to help.