What happens to any trust or inherited assets if I get divorced?

If you or your partner has received an inheritance, or benefits from a family trust (or hopes to do so), you may want to know how these kinds of assets will be taken into account if you get divorced or dissolve your civil partnership.  In particular, you may want to know whether these kinds of personal assets will be kept separate from your shared relationship assets, or whether they will form part of the pool of assets being shared and divided on divorce.

Will any trust interests be taken into account in a divorce settlement?

There is not necessarily a clear answer to this question.  There are different kinds of trust (including discretionary trusts, life interest trusts and others), and the type of trust will determine whether you or your partner has a clear entitlement or just a potential interest.

If it is not clear what you or your partner will receive from the trust by way of capital or income, or when, then it may be difficult to value for divorce purposes, or it may not be taken into account at all.

If the interest you or your partner has is clear, definite and quantifiable, then it will be taken into account with the overall assets when considering an appropriate overall financial settlement. However, the assets may be ringfenced as part of the divorce, on the same basis as an inheritance.

It may be necessary to instruct an expert to help with valuation and/or understanding the nature of the trust. 

Do inherited assets have to be shared on divorce?

Inherited assets are not automatically ringfenced from financial orders on divorce, since all your individual and joint assets will be taken into account as part of any financial settlement. However, in practice inherited assets may be treated differently than other assets which have been acquired or built up during your relationship if that is fair and practicable.

The court will take into account various factors such as how long the inheritance has been held, what is has been used for and if it has been kept separate from other assets. If there has been intermingling of inheritance (for example, some of it was used to reduce the mortgage over the family home) it may be more difficult for it to be ringfenced, although there still may be an offsetting exercise against other assets.

The other big factor is what the needs of both partners are (in terms of housing, income and provision for children). If the inheritance is needed, for example to ensure that the family can be rehoused, it will not normally be protected.

Of course these issues can be quite subjective which is why it is important to get advice on your particular circumstances. We can advise you on what a court is likely to order if you cannot agree, and help you reach a fair settlement. 

Have we answered your question? Would you like advice on your personal circumstances?

Email us at hello@ngalaw.co.uk or call on 020 3701 5915 and we will explain how we can help.