Divorce laws regarding the division of marital property vary from state to state. For example, states vary in how they define the marital estate, or the property that will be subject to division during a divorce.
As a result, it can be hard to understand how your property could be divided in a divorce, especially property such as inheritances.
Some states such as Indiana, Kansas and Massachusetts, are known as “kitchen sink states” because they do not distinguish between marital and separate property when defining the marital estate that is subject to distribution.
On the other hand, most states, including Ohio, do distinguish between marital and separate property. Marital property includes nearly all assets that were acquired during the marriage, while separate property includes assets that each spouse brought into the marriage.
Inheritances that were received during the marriage can also be considered separate property.
However, keeping an inheritance separate in a divorce proceeding isn’t always easy, even in states like Ohio that allow separate property to stay with one spouse during the divorce. For that reason, it’s best to take one of the following steps to best-protect an inheritance during a divorce:
Enter a prenuptial agreement. The prenup should clearly explain what the inheritance was and that it should remain separate property in the case of a divorce.
Keep the inheritance separate from marital funds. Keeping the inheritance in a separate account will make it easier to prove to the court that it was never marital in nature.
Have the inheritance passed down in a trust. A trust can be created that clearly names one spouse as the beneficiary and states that the property is not subject to division during a divorce.
Save documentation describing the inheritance. At the very least, it’s a good idea to save the papers that detail the inheritance and state that it was left to just one spouse.
Talk to an experienced family law attorney in your state for more information on protecting inheritances during a divorce.
Source: The Wall Street Journal, “How to Keep Your Inheritance in a Divorce,” Neil Parmar, Nov. 9, 2014