Protecting the children’s inheritance

The Court of Appeal has recently granted an appeal against the variation of a consent order made on divorce which has resulted in a man losing his entire share of the former matrimonial home.

When Anthony and Charlotte Critchell divorced, like many couples their only asset of real value was their home with equity of about £175,000. When the Court made the financial order dealing with their assets on divorce, their guiding principle was to make adequate provision for Charlotte and the couple’s two children’s financial needs. rather than any concept of sharing their assets. As a result, the agreed consent order was that the family home should be transferred to Charlotte and when it was eventually sold Anthony should receive 45% of the net proceeds.

Events, however, intervened when Anthony’s father died shortly after the Consent Order was made, leaving him £180,000. As a result Charlotte applied to the court to request a variation of the Consent Order and the High Court varied the order to give the matrimonial home to Charlotte free from any payment of the net proceeds of sale to Anthony. Anthony’s appeal was unsuccessful as the Court of Appeal found that the inheritance did have to be brought into account and, now that more resources were available, Charlotte’s needs could be met more fully.

From the perspective of Wills and trusts, this judgment highlights the way that children’s inheritance can be put at risk both from a matrimonial claim such as this, which ultimately reduced Anthony’s assets, and also if a beneficiary who inherits under a Will is in financial difficulty. The use of a trust or trusts in a Will can ensure that a level of protection is afforded against such third party claims and can help protect family wealth for the future.

It is particularly important to consider the use of trusts if your child is currently experiencing matrimonial or financial difficulties in case something unforeseen happens to you before these problems are resolved.