A wife has been awarded a lump sum of £8.738m, representing 32.5% of the parties' total assets, after the High Court found that the husband's inherited assets should be used to meet her needs.

In the case of Y v Y [2012] EWHC 2063 (Fam), the parties married in 1984, having met a year previously. They have five children in their late teens to late twenties. Both parties are in their early 50s. Baron J described the parties' lifestyle as "smart, expensive and… quite outstanding". The marriage broke down in September 2010, after a 26-year marriage.

The majority of the marital wealth came from the husband, who owned a 1,465 acre estate. The estate was valued at some £22.9m net.

The husband had inherited the estate from his grandparents, who had decided to "skip a generation" when settling their estate in 1967. He became beneficially entitled in 1983, a year before the marriage, when he reached the age of 25. However, he had grown up spending time on the estate and knowing he would eventually inherit. The parties had moved onto the estate upon their marriage, and into the mansion house in 1990, where they lived for the remainder of their marriage.

The estate included the family home and grounds, seventeen further residential properties including fourteen in the same village, the village pub, two farms (including a farmhouse, cottages, buildings and farmland), further farmland, an equestrian centre and other commercial properties. Rental income from the properties, however, was only c.£450,000 per annum.

The husband sought to ringfence the estate as inherited wealth, in order to keep it as intact as possible, arguing that it was a part of him, and that he sought to pass it on to his son.

Baron J recognised that the wealth had originated from the husband's side of the family, and should therefore be classed as non-matrimonial property. The court should therefore avoid invading the inherited wealth without good reason.

However, Baron J went on to recognise that if excluding the entire inherited property from the matrimonial pot meant that the wife's financial needs could not be met, then little weight should be given to the argument of ringfencing. Whilst the wife's needs should be interpreted fairly, this needed to be in the context of the fact that the wealth was inherited.

The husband was ordered to pay some £7.5m immediately, with the remaining £1.2m to be paid over 12 months. This would allow the wife some £5.4m for housing and furniture, and a Duxbury fund (in respect of capitalised maintenance) of £3m. Combined costs in the case totalled £1.1m.

Baron J found that leaving the husband with 67.5% of the wealth was appropriate, given the origin of the parties' wealth, and that the award made to the wife fairly met her needs, and encompassed any rights she had to share the assets.

He recognised that although the calculation was one based on needs, the award essentially involved the sharing of inherited assets. Needs and the right to sharing, in this case, were essentially the same.

Comment

Whilst prima facie, the court should be slow to invade non-matrimonial property. If ringfencing this property means that a party's reasonable needs cannot be met from the remainder of the monies in the "matrimonial pot", then according to the case of White v White [2000] UKHL 54, this argument should carry little weight. The difficulty is often in determining the reasonable needs of one family in contrast to another.

Increasingly, we are seeing more clients looking to protect their inherited assets through the form of a premarital agreement. Although such an agreement is not specifically enforceable by the court, it may be upheld where it is:

  • freely entered into by each party;
  • with a full appreciation of its implications;
  • unless, in light of the circumstances at the time the agreement is considered, it would not be fair to hold the parties to the agreement.