The property division process in your divorce is going to shape your financial picture for a long time to come. As you enter the process, then, you should be prepared with a firm and well thought out legal strategy. Given that North Carolina recognizes equitable division of marital assets, you’ll have a lot of room to argue for what sort of outcome is fair and just under the circumstances.
But that all starts with figuring out which assets fall within the marital estate. That might sound simple enough to do, but it can be an enormously complex process and one that leads to contentious litigation. This can be especially true when large inheritances are in play.
It depends on the facts. Generally, no, your inheritance will not be subjected to equitable division since from the outset your inheritance will likely be deemed individual property that falls outside the marital estate. That said, there are situations where an inheritance will be considered part of the marital estate. This includes when the inheritance is left to you as a marital gift and when you comingle your inheritance with marital funds.
So, if you received an inheritance, deposited it into a jointly held account and withdrew money from that account to support your marriage, such as by paying to renovate your home, then there’s a good chance that a court will determine that you’ve donated your inheritance to the marital estate.
Is there anything you can do to protect your inheritance?
Yes. There are a few ways that you may be able to insulate your inheritance from any potential request to divide it during divorce proceedings. This includes:
- Putting your inheritance in a solely owned account: When you receive an inheritance, your best bet is to deposit it into an account that is held in your name only. That way your spouse doesn’t have an argument that they had access to it, thereby rendering it marital funds.
- Using your inheritance wisely: If you use your inheritance to support your marriage, then it’s bound to be deemed a marital asset. Therefore, be careful before spending your inheritance to buy a house, invest in a family business or make improvements to your property. Doing so will likely convert your inheritance into marital property, which will limit what you’ll be able to get out of those investments through the property division process.
- Keeping detailed records: You’ll want to closely track how your investment is being spent so that you can clearly articulate whether new assets are marital or individual in nature. If you’re buying new assets, do your best to keep them in your name, including titling purchased property in your name, so that it’s clear that you’re the sole owner.
- Hashing out an agreement with your spouse: A prenuptial or postnuptial agreement can be a great way to protect your inheritance. So, by simply discussing your concerns with your spouse, you may be able to arrange an agreement that shields your interests in the event of divorce.
A solid legal strategy is a must when you enter your divorce. Otherwise, you may end up with the short end of the stick, struggling to get by in your post-divorce life. So, take the time necessary to think through your assets and the property division strategy you need. By doing so, you’ll hopefully secure the outcome that you need and deserve.