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The one thing that can cost you your inheritance in a divorce

On Behalf of | Sep 1, 2021 | High Asset Divorce |

When you divorce, you need to divide your property into two categories — marital property and separate property. Marital property covers most things you acquired since you married, and you need to divide this between you.

Separate property does not need division. Typically, it covers the things you owned before marriage, anything you inherited and anything you protected with a prenuptial agreement.

Yet sometimes a court will decide that property you thought was separate now counts as marital property. Why is this?

Take care to avoid commingling your property

Commingling is the legal term for mixing up separate and marital property to the point where you can longer work out which category it falls into.

Let’s use inheritance as an example. Your grandmother leaves you $200,000 when she dies. You put it in your joint account, where it becomes indistinguishable from the other monies you both deposit in the account. At one point, the joint account balance rises to $600,000, yet a few years later, when seeking to divorce, there is $300,000 left in the account. You claim $200,000 of that is your inheritance. Your spouse claims not.

Mixing your inheritance does not make it inevitable a court will treat it as marital property in a divorce. However, it does make it likely. To retain separate status, you need to prove that you did not treat it as joint money and show its origins.

The best way to protect your inheritance is to keep it apart. However, marriage is a joint affair, so mixing funds is typical. A thorough understanding of the legalities of marriage and divorce is essential to protect your assets.