Protecting Inheritances in Divorce

 Posted on November 28, 2014 in Distribution of Assets

For the majority of people who get married, the assumption is that it will be "’til death do us part." Despite the high rate of divorce, most couples think they will beat the odds and live happily ever after. Typically, all the assets a couple acquires during the marriage are pooled – income, gifts, inheritances, etc. are all shared between the two spouses. The reality is, however, that at least half of marriages do end in divorce, with an even higher rate if the marriage is a second or third marriage.

Most divorce negotiations involve how finances and property will be divided between the couple, but what happens with the inherited assets? Unfortunately, in many circumstances, unless there was an agreement in place before the divorce, those assets just may be included in the marital estate. A person may be able to keep that expensive piece of jewelry their grandmother left them, but the value of that piece becomes part of the marital estate and the other spouse is entitled to receive something of equal value in their share of the marital estate. The same may be true for inherited real estate property, stocks and bonds, and cash.

There are ways a person can protect those inherited assets in the event their marriage does not work out. The first step is a prenuptial agreement. Engaged couples should consider prenuptial agreements for many reasons, and this certainly is an important one. A prenup can clearly outline that in the event of a divorce, inherited assets go to the spouse they were intended for and not considered part of the marital estate.

If a person does receive an inheritance, it is important to save all documentation, especially documents that show that the inheritance was meant for only them, such as a letter from the donor or the donor’s gift tax return.

Another way to protect inherited assets is to maintain the funds in separate accounts from marital accounts that are only in the intended spouse’s name. Deeds and titles for inherited property should also only be kept in the intended spouse’s name.

Whether you are planning on getting married and are considering a prenuptial agreement or you are married and have decided to file for divorce, contact an experienced Arlington Heights family law attorney to get the best legal advice for your situation.