Can you protect an inheritance during divorce?

On Behalf of | Jan 12, 2021 | Divorce |

If you received an inheritance because of someone you love passing away or gifting you an inheritance during their lifetime, then you may be concerned about intermingling that money or those assets with your marital property.

You have good reason to be concerned about commingling your inheritance. Inheritances are separate property at first, but if you decide to mix your property, then you could end up losing it or turning it into marital property, which would be subject to division upon divorce.

Inheritances are separate property, usually

Initially, all inheritances are separate property. For example, if your mother passes away and leaves you $50,000, that money is yours regardless of your marital status. However, you do need to be cautious about how you use that money and how it is commingled with your marital assets.

If you want to keep your inheritance separate from your marital assets, you should keep it in its own bank account. You should not add it to a joint account, which would show the court that you intended to share it with your spouse.

You should also note that some of the items you buy with an inheritance could be deemed marital property. For instance, buying a gift for your spouse or buying a family home that you also put in your spouse’s name could impact your inheritance rights.

You should be cautious about accepting non-monetary contributions toward an asset you’ve inherited as well. For example, if your home is inherited but you allow your spouse to help with the painting or labor, then you could find that they’re owed “sweat equity,” which gives them at least some stake in the property.

There are many ways to mix inheritances with marital property

It’s easy to mix up your inheritance with your marital property. If you don’t want to see that happen, it’s a good idea to discuss how to handle your inheritance as separate property with your attorney. You may need to set up a separate bank account or keep certain assets in your name to avoid having them become marital property in the future.