Inheritance and Divorce – Court of Appeal Guidance

The treatment of inherited money in the context of divorce is always controversial. In one such case, a woman was permitted to re-open her divorce settlement after her ex-husband inherited £180,000 on the unexpected death of his father.

Following the breakdown of the marriage, the former couple had reached agreement as to how their assets should be divided. Amongst other things, the former marital home was transferred to the wife subject to a charge in favour of the husband which entitled him to a lump sum equal to 45 per cent of its value when it was sold. The settlement took the form of an order of the court, reached by consent.

However, shortly after the compromise was reached, the husband’s father died and left him about £180,000. It was accepted that his death was completely unforeseen and that the husband was unaware of his inheritance prospects when the consent order was agreed. However, the wife successfully argued that the question of financial provision for her should be re-opened and the charge in favour of the husband was discharged by a family judge.

In dismissing the husband’s challenge to that ruling, the Court of Appeal found that the fundamental assumptions on which the settlement had been agreed had been undermined by the husband’s inheritance. The judge was therefore entitled to substitute her own order for that previously agreed between the parties.