Divorce And Inheritance: What You Need To Know

If someone leaves you an inheritance, it is considered an asset. When you get divorced, you may wonder what happens to your inheritance when you have to divide your marital assets. An inheritance is treated differently than other assets during a divorce. Here is what you need to know.

What Is Considered Marital Property?

Marital property is assets you and your spouse acquired while you were married. Your individual names do not necessarily have to be on the ownership documents of the assets in order to be marital property. Each state has different laws when it comes to the division of marital property.

Timing and the payment method are the primary considerations when it comes to dividing marital property. If you used jointly earned income to purchase an asset, the asset is then considered marital property. If you bought an asset before your marriage with money you earned yourself, the asset may not be considered marital property, depending on the laws in your state.

What About Your Inheritance?

Inheritances are different during asset division after divorce. An inheritance is considered a sole possession of the recipient no matter if it was received during the marriage or not. The key is to leave the inheritance isolated from other marital assets. If you commingle your inheritance with other marital assets, the inheritance is no longer a separate entity. For example, if you receive an inheritance and use some or all of the money to buy a home for yourself and your spouse, the money is no longer an independent property. If you deposit the inheritance in your own bank account with only your name listed on it, the inheritance is safe from asset division.

Does an Inheritance Impact Other Parts of a Divorce?

Although an inheritance that is not commingled with other marital property is safe from asset division, it can impact other areas of the divorce settlement. For instance, if you received an inheritance and you expect alimony from your spouse, your inheritance may impact that. The court will look at all of your income and assets to determine alimony payments. If you have a sizable inheritance, you may receive a lower alimony payment.

Can You Safeguard Your Inheritance?

If you want to be certain your inheritance is safe, you can opt to get a prenuptial agreement. You can do this if you have already received an inheritance or if you anticipate being the recipient of an inheritance during your marriage. A prenuptial agreement is signed ahead of your marriage and protects your assets. Although an inheritance is typically safe from asset division, you can use a prenuptial agreement for added protection.

Contact a divorce lawyer to learn more.