Certain Inheritance Can Be Financial Resource in Divorce Settlement

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Under English law, a person is able (within limits) to decide absolutely to whom their estate should pass. However, many countries have ‘forced heirship’ laws, under which a deceased person’s estate must pass in specified proportions to a particular person or class of persons.

One context in which this can be important, as shown by a recent Court of Appeal decision, is in the financial settlement between a divorcing couple.

The couple who had split up are both joint nationals of the United Kingdom and Saudi Arabia and both are extremely wealthy. In the original settlement, the judge took account of the fact that the wife stands to inherit tens of millions of pounds from her father, who is a Saudi. The inheritance is certain under Saudi law, because of the forced heirship regime that operates there.

The wife appealed, partly on the ground that the judge was wrong to take her future inheritance into account.

Under the Matrimonial Causes Act 1973, in determining a financial settlement the court can only take account of any sum which one of the divorcing couple ‘has or is likely to have in the foreseeable future’. Normally, the inherent uncertainty regarding inheritances makes such sums very difficult to bring into the reckoning.

However, in this case, there was no such uncertainty because of the operation of the forced heirship provisions of Saudi law. This did not mean that the wife’s inheritance must be taken into account, only that it could.

Despite this, the Court ruled that the settlement did not meet the wife’s reasonable needs in the interim and remitted the case for consideration of additional sums to be paid to her.

Source: Private Client Library Content