This can be a thorny issue on divorce and can often invoke an emotional response from both parties.
When resolving financial issues, divorcing spouses must provide full and frank financial disclosure to one another in order to give transparency of their respective financial positions. Section 25 of the Matrimonial Causes Act 1973 provides the list of statutory factors that the court must apply to then determine how the income and assets of the parties should be distributed.
One of those factors is that the court must have regard to is the “income, earning capacity, property and other financial resources that each party to the marriage has or is likely to have in the foreseeable future” – section 25(2)(a) Matrimonial Causes Act 1973. This is in addition to applying established case law principles.
If someone is expected to receive property on the death of a third party, their divorcing spouse may argue that the court should take this property into consideration when assessing that person’s other financial resources. However, generally, the courts have been unwilling to attach much weight to the existence of property that a party may inherit because it is uncertain whether or not their expectations will be fulfilled. A person can of course change their will at any time.
In some cultures the concept of ‘forced heirship’ exists. This is an example of one of the rare occasions when the court may treat future inheritance as a financial resource that a party is likely to have in the foreseeable future.
On other rare occasions, a court could use its case management powers to adjourn an application until the value and likely timeframe to receive the expected inheritance is known. This usually happens if the death of the person leaving assets is imminent.
In reality, it would only really be worthwhile advancing an argument on future inheritance prospects where:
- The assets have a substantial effect on the positions of the parties
- The impending death of the person leaving the inheritance is a close family member and their intentions are well-known
- The inheritance is guaranteed by the succession laws of another jurisdiction.
It is always difficult to discuss with clients their future potential inheritance, particularly if the death of a family member is anticipated. There can be feelings of unfairness on both sides. Why should their divorcing spouse benefit from their inheritance?
On the other side of the coin, you may have a situation where one party has already used their family inheritance during the course of the marriage to benefit them both. All those assets may now be required to meet their respective needs and yet the court is unwilling to take into account their spouse’s future anticipated family inheritance, leaving feelings of inequity. Balancing the positions of both parties will always be a difficult task and more often than not, the final decision will rest with the needs of the parties.