Inheritances and Divorces
Divorce is stressful enough without having to worry that your ex-spouse will get a share of your family’s fortune. Even if an inheritance is technically owned separately, it may be considered marital property, during a divorce, if you commingle your inheritance with any other marital asset. An example of commingling would be putting your inherited money into a joint bank account you share with your spouse.
New York Courts Possible Treatments of an Inheritance During a Divorce
New York is an equitable distribution state. This mean that marital property will be divided “equitably” and not “equally”. For example, the spouse who earns the least or has very few separate assets typically receives a larger share of marital property. Equitable distribution allows a party in a divorce to seek a share of specific marital assets.
When you file for divorce in New York, if you and your spouse cannot agree on how to divide your assets, the courts will decide what assets will be part of the marital estate and subject to equitable distribution. Therefore, it is important not to mix (also referred to as commingle) your inheritance with your spouse’s property or any other marital assets.
Samples of Inheritances Becoming Commingled Property
- Depositing money you inherited into a joint bank account you and your spouse share.
- Depositing an inherited investment account into a jointly owned investment account owned by you and your spouse.
- Using inherited money to purchase a vehicle used by both you and your spouse.
- Using inherited money to pay down debt on a house owned by both you and your spouse.
- Adding your spouse’s name on a deed for real property
How to Protect Inheritance from Divorce
Some clients’ initial thoughts are to simply disinherit a child. That may not be the most prudent solution. There are more efficient, less dramatic techniques to ensure an inheritance stays in the bloodline. A good strategy may be to leave your children’s inheritance to them in a trust. This may prevent commingling of the inherited asset.
A good estate plan is complicated, therefore, you need an experienced attorney to guide you through the process. For any further information about setting up an estate plan or strategies to avoid commingling assets, please contact us to schedule an appointment.
