Inherited wealth ‘protected’ from divorce

18 August 2011

In a report published by The Telegraph this week, the High Court has awarded a wife, after 25 years of marriage, only £4.3million pounds in a divorce where the total wealth was between £21million and £24million. The reason given for this unequal sharing of wealth was that much of the Husband’s wealth had been inherited from his family and so the court felt it should remain with him.

The full case report has not been published and so the ‘detail’ of the Judge’s thinking is not known, but what seems clear is that the origin of the wealth merited a departure from an equal (or more equal) division of the assets. The Judge, apparently, made it plain that such an approach was made easier by the fact that the Wife, even with her lesser share, would be able to buy a house (albeit more modest than what she was used to) and that she could invest the remainder to generate an income for her year on year. Her financial ‘needs’ would therefore be met.

Increasingly we are seeing close analysis by the courts, even after long marriages, of how wealth has been acquired and whether part of that wealth can, in effect, be ring-fenced from a claim by the other spouse. Assets which have been inherited are perhaps the most obvious and easily argued example. It seems likely, however, that the protection of inherited wealth will arise only in cases where there are sufficient assets to meet each party’s ‘needs’ particularly after many years of marriage. For the majority of couples, the key concern for the court will still be where and how is each party going to live following a divorce and sophisticated arguments about inheritances etc may well remain the preserve of the very wealthy.

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