Knowing how to protect inheritance from a spouse is a common concern for people facing divorce in England and Wales. You may have inherited money, property, investments or an interest in a family trust and assumed these assets would remain separate from the matrimonial finances.
Inheritance is often treated differently from wealth created jointly during a marriage. However, inherited assets are not automatically excluded from a divorce settlement.
The court considers several factors, including where the assets came from, how they were used during the marriage, each spouse’s financial needs and whether the inheritance became mixed with jointly owned property.
A trust may provide some protection, but it does not guarantee that inherited assets will be ignored during divorce proceedings.
Is Inheritance Protected During Divorce?
Inheritance may be regarded as non-matrimonial property because it originated outside the couple’s shared financial efforts.
However, the court has wide powers when deciding financial arrangements following divorce. Under section 25 of the Matrimonial Causes Act 1973, the court considers the parties’ income, assets, needs, standard of living, age, health and contributions to the family.
Inherited wealth may still be considered where:
- It is needed to meet either spouse’s reasonable financial needs
- It has been used to support the family
- It has been combined with joint assets
- There are insufficient matrimonial assets available
- Children’s housing or financial needs must be met
The source of an asset remains relevant, but the way it was treated during the marriage can affect whether it is viewed as matrimonial or non-matrimonial property. The Supreme Court has recently examined this distinction and the circumstances in which non-matrimonial property may become connected to the marriage.
When Can Inheritance Become Matrimonial Property?
Anyone researching how to protect inheritance from a spouse should pay close attention to how the inherited asset is used.
Inheritance may become more vulnerable if it has been:
- Paid into a joint account
- Used to buy or improve the family home
- Used to repay a joint mortgage
- Transferred into both spouses’ names
- Invested in jointly owned property
- Used to fund the family’s usual lifestyle
- Combined with savings accumulated during the marriage
For example, inherited money kept in a separate account may be treated differently from money used to purchase a jointly owned family home.
There is no automatic rule. The court considers the length of the marriage, the value of the inheritance, the available matrimonial assets and the financial needs of both parties.
Can a Trust Protect Inheritance From Divorce?
A trust can provide separation between a beneficiary and the assets held within it, but it does not automatically protect inheritance from divorce.
A trust is a legal arrangement under which trustees manage assets for beneficiaries. Government guidance describes a trust as a way of managing money, investments, land or buildings for other people.
During divorce proceedings, the court may examine:
- The trust deed
- Who established the trust
- The trustees’ powers and independence
- The beneficiaries
- Previous trust payments
- Letters of wishes
- Whether the family relied on trust assets
- Whether one spouse can influence the trustees
- When and why the trust was created
The key question is often whether the trust represents a genuine financial resource available to one spouse.
Are Trusts Considered Marital Property?
Whether trusts are considered marital property depends on their purpose, structure and connection to the marriage.
Nuptial settlements
A nuptial settlement generally provides continuing financial benefit for one or both spouses because of the marriage.
Under section 24 of the Matrimonial Causes Act 1973, the court can make orders affecting certain ante-nuptial and post-nuptial settlements. This does not mean every trust can be varied during divorce. The court must consider the nature and purpose of the arrangement.
A trust may face greater scrutiny where:
- It was established during the marriage
- Both spouses or their children are beneficiaries
- It regularly funded family expenditure
- It holds the family home
- One spouse has significant control over it
Intergenerational trusts
A trust created by parents or grandparents to preserve wealth across generations may be less closely connected to the marriage.
However, it may still be treated as a financial resource if the beneficiary has regularly received money, property or other support from it.
The court may consider:
- The history of distributions
- The likelihood of future support
- The trustees’ independence
- Whether the trust funded the marital lifestyle
For more information about family trusts, read Arlingsworth’s guide to setting up a trust for children.
Offshore trusts
Offshore trusts can involve additional questions concerning jurisdiction, disclosure and enforcement.
Holding assets overseas does not remove the obligation to disclose financial interests during divorce proceedings. Specialist advice may be required from family, trust and overseas lawyers.
Are Assets in a Trust Protected From Divorce?
Assets in a trust may have stronger protection where:
- The trust was created independently by a third party
- It existed before the marriage
- The trustees act independently
- The beneficiary cannot demand payments
- The trust did not fund the family’s lifestyle
- It was not created to defeat a spouse’s claim
- Other assets can meet both parties’ needs
Trust assets may be more exposed where:
- The trust was established during the marriage
- One spouse effectively controls it
- The trust regularly paid household expenses
- Both spouses benefited from it
- The family home is held by the trust
- Assets were transferred shortly before separation
The answer therefore depends on the facts rather than the trust’s name alone.
How to Protect Inheritance From a Spouse During Divorce
A trust is only one possible part of a broader strategy.
Keep inherited assets separate
Keep inherited money in an account held solely in your name. Avoid combining it with joint income or savings without first taking legal advice.
Preserve evidence
Keep copies of:
- Wills
- Probate documents
- Trust deeds
- Bank statements
- Property documents
- Investment records
- Correspondence showing the source of the inheritance
These records may help establish that the asset originated outside the marriage.
Avoid unnecessary mixing
Using inheritance to purchase joint property, repay a mortgage or fund household expenditure can make it harder to argue that the asset remained separate.
Take advice before using inherited wealth for:
- A family home
- Joint investments
- Mortgage repayments
- Business funding
- Property renovations
Consider a nuptial agreement
A prenuptial or postnuptial agreement can record how inherited assets or trust interests should be treated if the marriage ends.
These agreements are not automatically binding in every case, but they may carry substantial weight where both parties entered into the agreement freely, received independent advice and disclosed their financial circumstances.
Review existing trusts
Trustees and beneficiaries should understand:
- The terms of the trust
- Who controls decisions
- The distribution history
- Whether the trust supported the marriage
- What rights the beneficiary has
Trust arrangements should have a genuine estate-planning purpose rather than being used to conceal assets.
Can Assets Be Put Into a Trust Before Divorce?
Transferring assets into a trust shortly before divorce is not a safe method of protecting inheritance.
The court may investigate transactions intended to prevent or reduce a spouse’s financial claim. Both parties are normally required to disclose their assets, liabilities and wider financial interests through Form E. Government guidance states that Form E provides a breakdown of property and debts, while the form itself requires disclosure of financial assets and interests.
Attempts to hide or transfer assets may lead to:
- Additional court proceedings
- Adverse findings
- Orders reversing transactions
- Increased legal costs
- Damage to a party’s credibility
Legal advice should be obtained before changing any ownership or trust arrangements.
Will My Spouse Get My Trust in a Divorce?
A spouse does not automatically receive part of a trust simply because the marriage ends.
The court may consider:
- Whether the beneficiary has a fixed entitlement
- Whether the trust is connected to the marriage
- Whether distributions are likely
- Whether the family previously relied on the trust
- Whether the settlement is nuptial
- Whether other assets can meet both spouses’ needs
Even if the trust itself is not divided, expected financial support from it may influence how other matrimonial assets are distributed.
Frequently Asked Questions
How can I protect inheritance from a spouse in the UK?
Keep inherited assets separate, preserve evidence of their source, avoid mixing them with joint finances and consider a properly prepared prenuptial or postnuptial agreement. Protection is not guaranteed because the court may still consider inheritance when assessing financial needs.
Are trusts protected from divorce?
Trusts are not automatically protected. The court may examine their purpose, beneficiaries, trustees, distribution history and connection to the marriage.
Are trusts considered marital property?
Some trusts may be closely connected to the marriage, particularly where they were established for the spouses or regularly supported the family. Independent intergenerational trusts may be treated differently.
Are assets in a trust protected from divorce?
They may have stronger protection where trustees act independently and the trust was not used to support the marriage. The result depends on the terms and history of the trust.
Is inheritance included in a divorce settlement?
Inheritance may remain non-matrimonial property, but it can still be considered where financial needs cannot be met from other assets or where the inheritance became integrated into family finances.
Can I put assets into a trust before divorce?
Transferring assets when divorce is anticipated may attract close scrutiny. Transactions intended to defeat a spouse’s financial claim can be challenged.
Speak to an Arlingsworth Family Law Solicitor
Cases involving inheritance and trusts can require detailed analysis of financial disclosure, ownership records and trust documentation.
For advice on how to protect inheritance from a spouse, speak to Arlingsworth’s family law solicitors about your circumstances.
This article provides general information about the law in England and Wales and does not constitute legal advice. It should be reviewed by an Arlingsworth solicitor before publication.
