We represented the Wife in financial remedy proceedings following the breakdown of a relatively short marriage. Unusually, whilst the parties had been in a relationship for over 15 years prior to the marriage, they had not cohabited until that point. The case raised complex questions about the treatment of inherited property and in particular whether assets the Husband had inherited could be brought into the matrimonial pot and shared on divorce.
Background
There was a property which was registered in joint names but had been purchased solely with the Wife’s funds.
The Husband had inherited two properties prior to the marriage, both registered in his sole name and together valued at in excess of £800,000. From the outset, he sought to ring-fence both as non-matrimonial assets, arguing they should be excluded entirely from the pot of assets to be divided on divorce.
There were also issues relating to conduct, namely dissipation of assets and financial misconduct.
Our Approach and Advice
We advised the Wife that whilst inherited assets are generally treated as non-matrimonial and fall outside the pot, this is not always the end of the matter. Inherited assets can be drawn into the pot or "matrimonialised" where they have become financially intertwined with the marriage, or where there is a financial need. We advised the Wife that whilst arguments were available to her in relation to both properties, her position was considerably stronger in respect of one than the other.
In relation to the first property, the rental income had been paid directly to the Wife by agreement throughout the relationship and used towards the parties' joint outgoings. We advised the Wife that whilst this formed part of the overall picture, the law is well established that receipt of rental income alone does not give rise to an interest in an inherited property.
In relation to the second property, we advised the Wife that she had a considerably stronger argument. She had made a direct and substantial financial contribution to the property from her own funds during the marriage. We also raised concerns about the Husband's failure to provide a satisfactory account of how funds connected to the property had been applied.
What the Husband Argued
The Husband resisted both arguments. He sought a 50% interest in the property which was registered in joint names. He also sought to ringfence both properties in his name as inherited assets. In relation to the first property, he argued that the Wife's receipt of rental income did not give rise to any interest in the property itself. In relation to the second, whilst he accepted the Wife had made a financial contribution to the property, he argued that the money had been spent for the joint benefit of the parties during the marriage and had therefore already been accounted for. On that basis, he maintained the Wife had no further claim to the property itself. Crucially, however, he was unable to produce any documentary evidence to substantiate this, which significantly weakened his position.
Outcome
The parties reached an agreement at the Financial Dispute Resolution hearing, after a strong indication from the Judge which supported our position. This avoided significant costs and the stress of proceedings to a contested final hearing. The terms agreed were as follows:
The jointly owned family home was transferred into the Wife's sole name
The first inherited property was retained by the Husband as non-matrimonial
The second inherited property was sold on the open market, with the net proceeds divided equally between the parties
A clean break was achieved, bringing all financial claims between the parties to an end
Key Takeaways
This case illustrates that inherited assets are not automatically protected in divorce proceedings. Whilst they are generally treated as non-matrimonial, two important exceptions exist. Where an asset has become financially intertwined with the marriage, there are strong arguments that it has been matrimonialised and should form part of the pot. And even where an asset remains non-matrimonial, it may still be drawn in where there is a financial need.
There were also arguments surrounding the property registered in joint names. Husband sought to argue that the property was the family home. This was disputed by Wife. The Judge accepted our argument in relation to this property and we were able to agree an outright transfer to Wife.
The approach of the courts in relation to non-matrimonial property has developed following the Supreme Court's decision in Standish v Standish [2025] UKSC 26. The source of an asset is no longer determinative. What matters is how the parties have treated it over time. If you have concerns about how inherited assets might be treated in your divorce, early specialist advice is essential.
