In a divorce, all marital property must be divided between the spouses. Marital property generally includes all assets acquired during the marriage by either spouse. An inheritance may be considered separate property, but you do yourself a disservice by assuming it will be excluded from this division. If protecting your inheritance in divorce is important to you, then you need to understand the potential risks of losing it – and what you can do to avoid that outcome.

Why Your Inheritance May Be at Risk in Divorce

Most inheritances are treated as separate property, and not shared marital property, regardless of whether the inheritance took place before or during the marriage. However, it is possible that separate property can be converted into marital property. In these cases, your inheritance can be jeopardized by a divorce and may be subject to division. This can occur in several ways:

Commingling funds: For instance, if you kept your assets in one shared account during your marriage, the commingling of these funds may allow your inheritance to be counted as marital property. This is one of the most common reasons for a spouse to lay claim to an inheritance in a  divorce.

Using inheritance for joint purchases: Purchasing assets together during the course of the marriage, such as a vehicle or real estate, is often considered marital property regardless of whose name is on the deed. If your inheritance was used to purchase a shared home, then you may find that the asset and equity you have built is now considered shared between you and your spouse. Additionally, if you have used your inheritance to pay shared expenses, then there is a chance the remainder may be considered marital property by a family law judge.

Contributing to an appreciation in value: Suppose the inherited asset grows in value because both spouses contributed to maintaining, improving, or managing it. The increase in value may be considered a marital asset, subject to division, even if the original inheritance remains separate.

Using Prenuptial and Postnuptial Agreements to Protect Inheritances

A prenuptial agreement can set out how property will be divided between spouses if a marriage ends in divorce. These agreements benefit both spouses, even when only one has an inheritance. By establishing clear expectations, a prenup can reduce uncertainty and let couples focus on other aspects of their relationship. Inherited assets can also be protected through a postnuptial agreement made after the marriage. A postnup can keep specific property separate and reduce the risk of commingling. Many couples find that it eases financial decision-making while giving the inheriting spouse peace of mind.

Protecting Family Businesses in Divorce

If you expect to inherit shares of a business or if you want to pass down your family business to the next generation, it may be beneficial to discuss business valuation and establishing clear boundaries with your spouse early on. Buy-sell agreements, pre- or postnuptial agreements, or other plans in place can help protect your family business if your marriage ends in divorce.

Planning Ahead for Inheritances

The best preparation to protect your assets often starts with sound financial practices before a marriage. Keep clear records, and know who has access to all of your accounts. Keep your inheritance as isolated as possible from your own day-to-day finances. Ensure that your inheritance is accounted for before it has the option to become commingled with another person.

Practical Tips for Safeguarding Inherited Assets

Keep a separate account for monetary inheritances. Do not use marital funds for the upkeep or maintenance of inheritances like real estate or collections. Do not pay for marital expenses out of your inheritance account. Keep track of what your inheritance has been used for, as well as who has access, and when and how you came into the money or assets at play. Consider legal protections like a prenuptial agreement, postnuptial agreement, or trust.

How Protecting Assets Impacts Your Children

It is common for parents to view custody and asset division as two separate battles, but they are deeply intertwined. Preserving your inheritance isn’t just about personal wealth; it is often about maintaining the financial stability necessary to provide a consistent lifestyle for your children. Whether it is funding a college education or keeping the family home, your separate property can be a lifeline for your children’s future.

Because these stakes are so high, you need a legal strategy that addresses the full picture. You might start your search by looking for a child custody attorney because your children are your emotional priority. However, the right legal team must also possess the financial acumen to protect your inheritance. Ensuring you have resources post-divorce is often the best way to serve your children’s long-term interests.

When in doubt or if you need assistance, contact a divorce lawyer to understand the full scope of protections available for your inheritance in divorce proceedings, as well as what can be done when your assets are being targeted by a spouse.

The Importance of Proactive Legal Counsel

Navigating the distinction between marital and separate property is legally complex, and mistakes made during the marriage—such as accidental commingling—can be difficult to unwind without professional help. Consult a qualified family law attorney to help protect your assets and enforce prenuptial or postnuptial agreements. By taking proactive steps to legally distinguish your inheritance from marital funds, you can ensure that your separate property remains protected, providing you with the financial foundation needed to start the next chapter of your life.