Can You Keep Your Inheritance in the Divorce?

  1. Separation & Divorce
  2. Can You Keep Your Inheritance in the Divorce?
wedding bands on dictionary

It is important to consult a divorce lawyer about keeping your inheritance in a divorce. Do not wait until your divorce is almost final – if you are thinking about getting a divorce, talk to a lawyer right away. Because your inheritance is too important to risk losing during the division of property during a divorce, make sure you have the appropriate legal protections in place.

Is an Inheritance Separate Property?

During a divorce, money that one spouse receives before marriage is treated differently than money received by either spouse during marriage. When spouses receive money during the marriage, it is usually treated as the marital property of both spouses. In contrast, money received before marriage may be treated as separate property owned by only one spouse.

Marital property is divided up in a divorce, either by the process of equitable distribution or by mutual agreement of the spouses. The court or the spouses decide which items of marital property go to which spouse. In contrast, separate property remains the property of only one spouse after the divorce. Importantly, inheritances could be considered marital property or separate property. The way divorce affects a specific inheritance depends on several issues that you should discuss with your lawyer.

Commingling and Inheritances

You should know that separate property can become marital property under some circumstances. Commingling is one of these circumstances. Commingling happens when you use property that was originally separate property to benefit the marriage in some way. For example, you might have moved your inheritance money to your joint bank account with your spouse, using that money to pay your mortgage or other joint expenses. Or you might have used the inheritance to pay off your spouse’s debt. Even using the inheritance’s increases in value (such as earned interest) to benefit your marriage could affect the inheritance’s characterization as marital or separate property. If your inheritance is used to benefit both you and your spouse (and not just you alone), then it might be considered marital property in a divorce.

Determining whether an inheritance counts as separate or marital property is a fact-specific inquiry that the court will perform. The court will look to your and your spouse’s intentions, as well as other factors relating to the money, such as how it has been kept and used. Make sure to speak to a lawyer about commingling and other issues related to property distribution. Since property distribution can be one of the more disputed aspects of a divorce, you need a lawyer to help protect your rights.

How Can You Protect Your Inheritance?

There are a few ways that you can protect your inheritance in case of divorce. One of the more secure methods is by signing a prenuptial agreement (prenup) or a postnuptial agreement (postnup). A prenuptial agreement is a contract that you sign before marriage, while a postnuptial agreement is signed during the marriage. Both of these agreements can include language that specifies a certain asset as separate property if you and your spouse get a divorce. Prenups and postnups can protect spouses’ separate assets by communicating your understanding about how to treat property. If you do divorce, you can use the agreement as proof of your intentions.

If you don’t have a prenup or postnup, make sure you save documentation relating to the inheritance. For example, keep records from your bank accounts or investment accounts where you keep money from the inheritance. You should speak to your divorce lawyer about how to use the documentation to show that the inheritance was intended to be separate property. Some divorcing spouses are able to reach separation agreements, divorce settlements, or compromises through mediation on how to treat inheritances. Because there can be a lot at stake during the property distribution process, effective legal advice is essential for protecting your separate property.

New Direction Family Law Is Here to Assist You

If you are considering ending your marriage and have an inheritance you want to protect, the team at New Direction Family Law is available today to answer your questions. Our lawyers’ decades of combined legal experience give us insight into your specific situation. We are knowledgeable, effective, and compassionate professionals who will work hard toward your best outcome. Contact New Direction Family Law at (919) 646-6561 to schedule a consultation, or visit us at our website.

Previous Post
Will You Lose Your Health Insurance in the Divorce?
Next Post
Can You Modify Property Division after Your Divorce is Finalized?