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Protecting your inheritance in a divorce

On Behalf of | Jan 24, 2019 | Asset Divison |

When two people marry, they often share everything. They generally create a joint bank account where both their incomes go. In the event the couple divorces, they will need to divide the money and assets, and when one spouse received a hefty inheritance, it can create problems.

When spouses are not careful, they can lose up to half of the inheritance in a divorce. However, there are steps both people can take to protect the money they receive from an inheritance.

Keeping the inheritance as separate property

There are two types of property a divorce court concerns itself with: separate and marital property. Separate property is anything one spouse maintained separately from the marital assets. For example, if one spouse received an inheritance prior to the marriage and kept it in a separate bank account, then a judge would view that as separate property. However, if one spouse takes that inheritance and commingles it with the marital fund, then it becomes marital property.

Therefore, many people prefer to keep such money in a bank account under only their name alone. This money may go toward marital endeavors, such as purchasing a house or car both people use. In this instance, the inheritance becomes marital property because it is now a house both people likely contributed to financially, at least in part.

Showing intention of the inheritance

Many spouses put most of the inheritance into a joint bank account for the couple to share during the marriage. It is possible to get back all of those funds in the event of a divorce if the spouse can prove the parents intended to give the money as a gift to one person only. This can become complicated, but it may be possible with the right legal strategy. Ultimately, it may work in a person’s best interest to keep the money from the inheritance in a separate bank account just to be safe.