Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Wednesday, August 20, 2014

Protecting Inheritances in Divorce

Divorce

When Karen’s grandfather passed away, Karen inherited a substantial amount of money.  Yet during Karen’s divorce, her husband threatened to take half of her inheritance. 

Because Karen’s story resonates for many individuals going through divorce, it is important to know how to protect gifts and inheritances. 

Firstly, it noteworthy to mention that whether a particular asset can be divided as part of a divorce settlement depends on how it is classified: separate property or marital property.  State laws governing property differ in details.  Generally speaking, separate property includes inheritance received by either spouse.  Yet the critical consideration is whether the separate property has been comingled with marital assets.  If Karen deposited the inheritance into a joint bank account or used it towards a purchase in both their names, the inheritance will most likely be deemed marital property, and is now subject to division. 

Gifts to either spouse from a third party are also considered separate property.  Like inheritances, caution against comingling still applies.  In some divorces, one spouse will claim money received was a gift and the other spouse will claim it was a loan.  To avoid any contentious disputes, if you receive or make a gift, draw up paperwork indicating specifically to whom the gift is being made, and there is no expectation of repayment.

See Jeff Landers, Divorcing Women: Here’s How to Protect Your Inheritances and Gifts, Forbes, Aug. 19, 2014.   

http://lawprofessors.typepad.com/trusts_estates_prof/2014/08/protecting-inheritances-in-divorce.html

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