How Can I Protect My Inheritance From My Ex-Spouse?
The details of each divorce case can make all the difference when it comes to inheritance. Generally, the law protects an inheritance when spouses part ways, however, your financial behavior has the potential to make that difficult. If you are not careful, any commingling of the inherited assets with marital property can leave your inheritance vulnerable to your ex-spouse. Here are a few of the basics you need to know in order to protect your inheritance in the event of a divorce.
How an Inheritance is Divided in a Divorce
An inheritance is normally treated the same as premarital property in the event of a divorce, which means it is not subject to equitable distribution. As a result, you should be able to keep your inheritance from your ex-spouse since it is considered separate property and as long as it was given solely to you. Although, this is only the case if there has been no commingling of the inherited funds with marital property.
What is Commingling?
Separate property can become marital property if it is commingled, or “mixed together,” with a property that belongs to the other spouse, or with a property that is acquired by either spouse during the marriage. Property that becomes commingled cannot be separated. In order to protect your inheritance, all of your awarded assets should be kept in separate accounts. None of that money should be placed in a mutual account that has your marital funds. Similarly, none of your marital funds, not even a paycheck, should be deposited into an account that already contains those non-marital funds. When property remains segregated or can be traced back to its original source, no commingling occurs and the separate property cannot be divided as marital property by a Maryland court.
Transmutation is another manner in which you may potentially change your separate property into marital property. This can occur if, for example, you were to add your spouse’s name to the deed of a property you inherited. It could then be argued that the inheritance was gifted to the marital estate. Another example of how transmutation can transpire is if you were to use inherited funds to make a mortgage payment on a house you and your spouse own.
How to Protect Your Inheritance
The burden of proof will fall on you if your spouse claims that your inheritance has become commingled or transmuted with marital property. Therefore, saving any and all documentation regarding bank accounts, tax returns, and investment accounts is vitally important. If separate funds have been commingled, a professional may be required to prove the origin of the funds and track exactly when and how the money or assets became marital property. That way, at least a portion of the original inheritance may be able to be preserved as separate property. On the other hand, transmutations can be less difficult to reverse, if there is no signed document proving that the property was gifted to the marriage.
Protecting your inheritance can also be done by entering into a postnuptial agreement, also called a postmarital agreement. This is a legal contract that, if signed by your spouse, can establish that the inheritance is yours alone.