Will an inheritance be lost if my child/grandchild gets divorced?
If you are considering leaving your children or grandchildren a substantial inheritance, then you should consider the best way to do this to protect the assets and keep them in the family in the event that your child/grandchild ever got divorced.
If you do not plan ahead then if they did get divorced, there is the possibility that half of the inheritance you have left will be lost in divorce proceedings.
What is inheritance tax on large gifts?
Some people leave all of their Inheritance to their loved ones through their Will, whereas others gift during their lifetime.
If you gift a large sum of your money to a child or grandchild when you are alive then it remains part of your estate if you die within 7 years of making the gift. After 7 years, the gift is outside of your estate for Inheritance Tax purposes.
In the 2026/27 tax year, anything in your estate over £325,000 will be taxed at 40%.
Tax treatment depends on individual circumstances and may change over time. The value of any tax benefits or reliefs will therefore vary from person to person and cannot be guaranteed.
Will an inheritance be classed as martial property?
Any assets that have been inherited by one spouse may be treated differently in divorce but there are a lot of variable factors such as how long the marriage has lasted and if the inheritance was previously used as part of joint finances.
If the inherited assets were previously used for joint expenses or joint investments that benefit both spouses then it may be more challenging to argue that they should be treated as separate property and it might then be that the inherited assets are split 50/50 during divorce proceedings.
If I gift an inheritance into a trust, is it protected from divorce?
Gifts placed into trust allow you to retain control of the gift and specify who receives the gift and when. This means that gifts in trust are considered separate property and are usually not included in divorce proceedings.
There are many different types of trust so it is important that you take financial advice to make sure that the trust you choose is right for your individual circumstances.
A financial adviser at Borealis Financial Planning can explain to you the different types of trust and work out which one will work for you.
Book a no-obligation meeting now
Find out how to protect your loved ones inheritance
You can book a no-obligation meeting with a financial adviser at Borealis Financial Planning online or by calling 0117 456 5921. A meeting will last around an hour and can be at your home address, on zoom or at one of our offices. A financial adviser can help you determine the best way to protect any inheritance you are leaving your loved ones to make sure it stays in your family.
Book online or call us on 0117 456 5921
Trusts are not regulated by the Financial Conduct Authority.
SJP approved 20/05/2026