During the property division part of a divorce, assets and debts are divided among the couple. As we discussed last week, there are several points to consider when dividing credit accounts. There are also several points to consider when you have an inheritance that must be divided.
Are all inheritances considered marital property?
How an inheritance is classified during a divorce depends on whether the inheritance has been comingled with marital property. This means that if the inheritance is money that was placed in a joint bank account, it can be classified as a marital asset. If the inheritance is used to make improvements on the marital home, it might be considered marital property. In the case of an inheritance that has been shared during the marriage, Texas state law would dictate how the inheritance is handled.
Is there a way to protect an inheritance?
One way to protect an inheritance in case of divorce is to make sure the assets stay separate from marital assets. This can be done by keeping only your name on titles or deeds and keeping funds in an account only in your name. Another way to protect at least some of the inheritance is to obtain proof that the inheritance wasn't meant to be shared because it was intended for only you. Of course, a premarital agreement can also be beneficial for anyone who has an inheritance prior to getting married.
There are a lot of factors that can affect how an inheritance is handled during a divorce. Understanding all of the factors that affect your inheritance can help you to learn your options for dealing with the inheritance during the property division process.
Source: FindLaw, "Inheritance and Divorce," accessed April. 16, 2015