Yet Further Case-Law Illustrates The Wide Discretion That Is Applied Richard Handel By The English Family Courts To The Treatment Of Inherited Wealth

The two recent decisions of Y v Y [2012] EWHC 2063 (Fam) and Davies v Davies [2012] EWCA Civ 1641 consider the treatment of inherited assets upon divorce. Whilst these cases create no new law, they illustrate yet again that each case will turn on its own facts and sound a cautionary tale to those who intend to marry without a pre-nuptial agreement having received or who anticipate receiving a significant inheritance.

In Y v Y, the parties were married for 26 years. The husband's family had accumulated great wealth founding a large Estate in Oxfordshire worth just short of £27million to which the husband became beneficially entitled one year before marriage and four years later it was passed to him absolutely.

The Judge concluded that the wealth was non-matrimonial (i.e. it had not been acquired during the marriage but derived from the husband's inheritance), and therefore the Court should be slow invade it without good reason. However, the wife's capital and income needs had to be met and to satisfy those there would have to be some sharing of the inherited assets.

The wife was awarded a total of £8.7million (32.5%) which left the husband with £18million (67.5%). The Judge said the award would meet the wife's needs but that her entitlement to share in the inherited wealth should be limited to her needs.

This approach is to be compared with that in the case of Davies v Davies which primarily concerned the treatment of a hotel that had been inherited by the husband prior to marriage. The husband appealed against a decision to award the wife £2.2m and the matrimonial home arguing that the wife's entitlement was modest as it was a short marriage and the award should not invade the hotel as it was not the product of a shared endeavor because it had been passed down to him from earlier generations and the wife had made only limited contributions to it. The wife's case was that the status of the hotel had risen dramatically as a result of her enterprise although she accepted that one-third of the value should be ring-fenced and excluded from the sharing principle but the rest should be divided.

The Judge at first instance found that at the beginning of the parties' relationship, the net value of assets in the business, apart from the hotel properties, was effectively nil. He concluded that the wife had made a high contribution to the hotel's success and that it would be impossible to identify the parties' differing contributions. Without...