Georgia Marshall is a director of Marshall Diel & Myers Limited and a member of the Matrimonial & Family Team. *Photo supplied
Georgia Marshall is a director of Marshall Diel & Myers Limited and a member of the Matrimonial & Family Team. *Photo supplied

Myth #9 — My spouse can’t make a claim against my inherited property if we divorce.

Ownership of real estate, whether it has been purchased and paid for over many years or whether it has been passed down by way of inheritance, evokes very strong feelings. This is true universally, but on a small island such as Bermuda, where there is only 21 square miles of land, these feelings of pride of ownership and family tradition are amplified many times over. 

There is little doubt that these feelings result in the common misconception that upon divorce the party who inherited the real property keeps it without account of the property being taken in the financial settlement. However, the reality is somewhat more complicated.

The modern approach of the Court in matrimonial financial settlements is to divide property into two different categories. The first category is matrimonial assets. Those are the assets created by the parties either jointly or separately during the marriage. When the marriage breaks down, unless there is good reason to adopt a different approach, the matrimonial assets will usually be divided equally between the parties. 

Non-matrimonial assets

The second category is non-matrimonial assets. 

This is the property owned by either party prior to the marriage; property inherited by one of the parties before or after the marriage, and property that one party received by gift during the marriage.  

These assets are not part of the matrimonial assets category because they were not created by the efforts of the parties during the marriage. They are derived from a source external to the marriage. 

At this point you must be saying to yourself, “Well, if my inheritance is not a matrimonial asset and if it came to me from a source external to the marriage, I keep it, right?”…. Wrong. 

When a marriage ends and parties are not able to agree on a division of their financial resources, the Court, when called upon, will consider all the facts and will apply, amongst other criteria, a fairness principal when determining the resolution.  

As part of this overriding principal of fairness, the Court will first consider the matrimonial assets and if a division of these assets will meet the fairness test so that the needs of the parties and the children are met to the standard enjoyed by the family during the marriage both as to capital and income, then the party who inherited the property may be able to keep that asset without having to share the value with the other spouse. 

Pool of assets

However, and as often happens, if the matrimonial pool of assets is not sufficient to meet the reasonable needs of the parties and their children, or if there are no matrimonial assets only the inherited asset, the Court will bring the inherited asset into account to the extent necessary so that fairness is done.  

The matrimonial home, regardless if was inherited, pre-owned or gifted to one party during the marriage, by its very nature is central to the marriage and is considered to be a matrimonial asset. 

Unless there is good reason to do otherwise, the Court will divide this asset equally between the parties. 

Determination of whether property is matrimonial or non-matrimonial is only half the picture. When the Court considers the relevant facts of the case, it assesses and takes into account the financial resources of the parties. 

Although an inheritance is not a matrimonial asset, it is a financial resource of the party who inherited it. 

The longer the marriage, the more likely it is that an inheritance has been co-mingled with the other matrimonial assets and that both parties have treated the inheritance as a financial resource of the family intended to provide for the family generally into the future. The longer the marriage, the more likely that the inherited asset will have merged with the matrimonial assets. 

In those circumstances, fairness will dictate to what extent, if any, the person who inherited the property should retain a share greater than 50 per cent.

The treatment of inherited property in divorce proceedings, whether the marriage has been long or short, can cause anxiety, antagonism and sometimes downright hostility making settlement outside of Court very difficult. 

This is particularly so when emotional attachment to this scarce resource is added to the mix.  

An experienced matrimonial attorney, who understands the relevant principles, can greatly assist parties in coming to a resolution by focusing the parties on the principal of fairness and by tempering the emotional response. 

Georgia Marshall is a director of Marshall Diel & Myers Limited and a member of the Matrimonial & Family Team at Marshall Diel & Myers Limited. She may be contacted at georgia.marshall@law.bm or at 441-295-7105 

A copy of this article can be found at the firm’s website at www.law.bm. This column is for general guidance only and does not constitute legal advice.