A sad reality of life is that not every marriage will survive, and money fights and money problems are among the top reasons for divorce. But when the unthinkable happens, it’s not uncommon to wonder, “Can my wife take my inheritance in a divorce?”
As a general rule, a spouse will not have access to inherited property or assets. However, depending on the state laws and your actions, there could be exceptions. To exclude an inheritance from shared property, ensure it stays in a personal account and not a shared account.
Divorce settlements are usually very dicey.
A misstep at one point or another can make you lose your inheritance to your ex-spouse. Here, you will find answers to your most pressing questions about divorce and inheritance.
What is considered marital property?
Marital property is all property, regardless of title, which was acquired by either party during the marriage.#divorce #divorceattorney #property #marriageassets #divorceagreement #divorceadvice #inheritance #prenup #jointassets pic.twitter.com/SocXItSzU6
— Law Offices of Granda & Associates PA (@GrandaLawMiami) February 8, 2022
When Does an Inheritance Become Marital Property?
Many state laws, as a general rule, separate personal property from marital assets. Even for states who don’t, inherited money enjoys an exception.
However, you might not be aware that in order to qualify for that exception, you must manage such gifts or inherited assets in a precise way. So, can you lose your inheritance to your divorced spouse?
The answer to this question will depend on whether you combined your inherited and marital assets. Also, your answer depends on whether you live in a community property state or a separate property state.
The common law form of property ownership is used in the majority of states, which makes it extremely clear which spouse owns what. Regardless of how the item was obtained or who made the original payment, if only your name appears on the account, deed, title, or registration, the asset is yours.
You may forfeit full ownership of your inheritance if your spouse’s name appears on any of these.
What Are Separate Property and Community Property?
Understanding the distinction between separate and marital or community property is crucial to understanding how inheritance might be divided during a divorce case.
After all, if handled poorly, money issues CAN ruin a relationship.
With this knowledge though, as my recent article explained, many relationships can be prevented from failing, especially if you employ my 3rd tip in that article.
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Your premarital possessions, as well as any assets you acquire as gifts or heirlooms during your marriage, are regarded as separate property. These separate properties are exempted from divorce property division even in an equitable distribution state.
Separate property also includes any property you and your spouse agree to exclude from marital property. The passive value increase of such real property also counts as separate property, provided it wasn’t produced by the effort of the married couple.
On the other hand, community property refers to whatever asset you and your spouse acquired while you were married.
Included among separate property is:
- Donations from third parties and inheritances
- Real estate you held before marriage
- Revenue from a different property
- Monetary compensation for personal injuries sustained before marriage
To this rule, there are some exceptions.
Understanding your state’s laws will be crucial in distinguishing separate property from marital or community property because each state has a different procedure for doing so. Your lawyer can provide you with the right legal advice because they are knowledgeable about this area of state law.
For instance, if you reside in a state that recognizes community property, all assets you and your spouse acquire during your marriage—even those given to just one of you—are regarded as marital funds.
Do I Have to Give My Spouse Half of My Inheritance?
Among other things, state regulations determine how an inheritance is distributed during a divorce. Assume you reside in a state that follows the community property system. In this case, any inheritance funds you obtain in the course of the marriage count as marital property subject to property division.
These states have more intricate laws regarding dividing inheritances and other assets. If you combine your individual and married assets, this is known as commingling.
For instance, if you receive cash inheritance from a relative and put the money in joint bank accounts with your spouse, the inheritance funds are now considered part of your joint assets.
The implication is that, in the event of your divorce, your spouse might be entitled to a portion of the inheritance funds.
Bill & Melinda Gates Divorce |
Couple doesn’t have a prenuptial agreement, but will instead be dividing their assets according to a separation agreement. #MelindaGates has mentioned in the petition that “spousal support is not needed.”#BillGates #BillGatesDivorce pic.twitter.com/RcArbuTZsd
— Voice For Men India (@voiceformenind) May 5, 2021
Should I Put My Inheritance in a Joint Checking Account With My Spouse?
Legal difficulties occur when one spouse receives an inheritance from a family member. Both partners must be aware of this. The interests of the spouse receiving the money might sometimes line up with those of the other spouse, particularly if there are children from a previous marriage.
Although disagreement isn’t a given, you should consider the legal ramifications of placing inheritance in a joint account.
While it can be an admirable expression of love, placing your inheritance in a joint checking account could be a regrettable decision. The moment your inheritance gets into a joint checking account, many things change.
The law deems your inheritance as separate property. But if you decide to place it in a joint checking account, it will lose that designation.
Your inheritance money in a joint checking account means commingling your inheritance. As we’ve earlier seen, commingling your inheritance makes it marital property.
So, except if you don’t mind sharing your inheritance with your divorced partner, a joint checking account should be the last place it should go.
Can An Ex-Wife Get Her Ex-Husband’s Inheritance If He Dies?
Many people consider their last will to be their final statement to the world.
It’s a popular belief that if you are divorced, your former partner may no longer file an inheritance claim against your estate if you pass away.
However, this belief has proven to be a myth in many instances. As long as your divorced partner hasn’t remarried, she can still file an inheritance claim against your estate if you are no more.
If you wouldn’t want your inheritance in the hands of your ex-spouse after your demise, there are steps you can take. Besides keeping your inheritance separate from a joint bank account, you can get your ex-spouse to collaborate.
You and your ex-spouse can sign a mutual deed of release to completely bar your ex-spouse from claiming a provision under your will when you pass away. You and your ex-spouse have agreed in writing that you will not file a claim against their rstate in the future.
As the name implies, there must be consent from both parties.
How Can I Protect My Future Inheritance from Divorce?
You must maintain a separate account for any gifts or inherited property you intend to leave out of the marital estate. Depending on when you received the property, there may be different answers to how to retain inherited separated property.
Typically, any inheritance you receive before marriage falls under a separate property.
However, you may receive a huge gift in the course of the marriage or inheritance after you tie the knot. A crucial aspect of safeguarding this future inheritance is ensuring that the money is never combined with any joint property you own with your spouse.
They usually become shared property once they enter the marriage pot.
Typically, state laws will keep your inheritance separate and will not be included in child support or any spousal support. However, if you refuse to work but use the interest on the inheritance to cover living expenses, the court can take your inheritance for child support.
A clearly worded postnuptial agreement or prenuptial agreement can keep your inheritance with you in the event of divorce. But still, such agreements will only hold water if your inheritance is outside your marital property.
To keep some assets separate from marital assets, you may also use a trust.
Although you will be the trust’s beneficiary, the trustee will decide how much money is given to you. Even if you do not take such assets out of the trust, the court may decide that they are yours if you are able to receive them.
However, before making a choice, be sure to speak with experienced family law attorneys. Some companies offer a free consultation for clients during which you can get guidance on which plan complies with the rules in your state.
It hurts to lose your inheritance and your partner at the same time. But you do not have to go through this ordeal. My recent article gives major pointers that will help you come out unscathed in the event of a divorce.
By using a separate account or using a trust, you can insulate your inheritance from your divorce. Prenuptial and postnuptial agreements can also save the specific situation.
You can avoid forfeiting your inherited money to your ex-spouse after your unfortunate demise. Reach an agreement with your partner through a mutual deed of release. This deed will ensure that only your children or those listed as beneficiaries in your will can access your inheritance.
To make things go smoothly, also ensure that you secure the services of an experienced divorce attorney. Your divorce lawyer will know the best way to help you keep your inheritance.