We are regularly asked whether the future inheritance prospects of a client or their spouse is likely to be considered in the resolution of divorce finances.
Generally speaking, to be taken into consideration, future inheritance needs to be foreseeable. As a result, the Court will very rarely take it into consideration in meeting the needs of the parties. However, each case will turn on its own facts.
What factors do divorce courts consider in regards of future inheritance?
The Court will consider all relevant factors, such as the age and health of the person who would provide the inheritance and their capacity to change their Will.
If, for example, the person who would be providing the inheritance has already exceeded their life expectancy, and if they no longer have the mental capacity to change their Will (as a result of an illness, such as dementia, for example), it could be possible to successfully argue that the resultant inheritance is foreseeable.
In comparison, if the donor of the inheritance is significantly younger than their life expectancy, is in good health and has the capacity to change their Will, the Court is more likely to determine that the future inheritance is not foreseeable. In that case, they may say that the inheritance should not be taken into consideration.
In those circumstances, it may not be known how much the possible inheritance will be, if any. The donor may in the future change their Will to exclude the potential beneficiary, or spend the majority of their estate, leaving little or no inheritance.
Each case will be determined on its own facts.
Is my spouse therefore entitled to a share of my inheritance, either already received or likely to be received in the future?
If an inheritance has already been received, it depends on how that has been treated during the marriage, and what the needs of each party to the marriage are, before it can be determined whether an inheritance should be shared on divorce. I have previously written a separate article about how the Courts treat assets which have been inherited during the marriage which can be found here.
If the inheritance has not yet been received, unless the amount and timing of the inheritance is foreseeable, it is unlikely that the Court would order that the inheritance should be shared when it is received. If the inheritance is foreseeable and highly likely to happen, as set out in the example above, if the parties have sufficient other resources to meet the needs of them both, again the Court are unlikely to order that the inheritance should be shared. However, if the inheritance is foreseeable and highly likely to happen, and there are insufficient resources to meet needs on divorce, the Court may well take the inheritance into consideration when making an order to divide the other assets between the parties. The inheritance is likely, in that scenario, to be taken into consideration as a resource that will be available to the person inheriting which will not be available to the other spouse. Depending on the circumstances, this may justify a greater share of the other assets being retained by the person who is not going to inherit. The outcome however is very much case specific and it depends on the circumstances. Therefore it is essential to take advice at an early stage in relation to your specific circumstances, in the event you are considering separation or divorce.
For specialist legal advice, our Family team is here to help. You can also contact our Inheritance team if you wish to update or create a Will.