Often, when spouses go into a marriage with assets they've inherited or they inherit them during the marriage, they assume that they are separate property rather than marital property should the marriage end. However, depending on how you handle those inherited assets, your spouse could end up with a portion of them in a divorce.
As we have discussed before, prenuptial agreements are a good way to protect inheritances and other assets that you have when you get married. However, even if you don't have a prenup or don't get a postnuptial agreement to include an inheritance received later, you can protect those assets if you keep them separate from any marital assets.
What Is Commingling?
If you commingle inherited assets with marital assets, they're no longer immune from being divided in a divorce. That's true whether you had them when you wed or received them later.
A common way that this happens is that people deposit inheritances into a joint account with both spouses names on it. Even if your spouse doesn't touch the share of the balance that is your inheritance, the funds have already been commingled. Likewise, if you set up a specific account for your inheritance and then deposit marital assets in it, the funds are considered commingled.
Often, people use their inheritance to buy a home or make home improvements. If your spouse's name is also on the title, that, too, is considered commingling the inheritance. If you inherited a property and you spend marital assets to maintain or renovate it, you've also commingled the assets.
Providing for Current and Future Inheritances in a Prenup
If you draw up a prenup before you marry, you can specify how any inheritances will be treated, whether you have the assets already or get them at some time in the future. Even if you aren't expecting anything, it may be a safe thing to include. Your great-aunt who lived frugally her whole life may have millions of dollars stashed away that no one knows about that she decides to leave to you. You never know.
Many people are happy to commingle their inheritances with their spouse and family to improve their lives and possibly get out of debt. However, you should be aware of the laws around division of inheritances in your state. If you want to protect a substantial inheritance, it's best to seek legal as well as financial guidance.
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