The financial aspects of a divorce can be complicated, especially when an inheritance is involved. Will your spouse have a legal right to your inheritance? What if you inherited the money before or after your marriage? Unfortunately, these questions will depend on a variety of factors.
Separate property and marital property
Dividing assets in a divorce depends on whether the assets are separate property or marital property. Because Massachusetts is an “equitable distribution” state, each spouse has a fair and equitable claim to assets considered to be marital property.
Separate property, on the other hand, does not need to be divided in a divorce. Separate property generally includes:
- Inheritances or gifts given by a third party
- Assets or debts acquired prior to the marriage or the date of separation
- Compensation for pain and suffering from personal injury lawsuits
- Anything specified as separate in an existing prenuptial or post-nuptial agreement
Courts cannot agree on when to consider the “date of separation.” While some consider it to be the date the spouses decided to end the marriage, others consider it to be the date that one of the spouses moved out of the home. If you are getting divorced, it is important to have this information documented when you begin dividing your assets.
Avoid commingling property
You do not need to divide separate property, unless it becomes mixed with marital property. If you receive any inheritances or monetary gifts, it is important to keep the money in a separate bank account and not combine it with any joint marital assets. For example, if you receive inheritance, be careful using part of it to purchase your home. The house will likely be subject to laws of equitable division in a divorce and you might have a hard time retaining all the money you spent from your inheritance.
To protect your separate property in the event of a divorce, make sure to keep documentation of any assets you acquire before, during and after your marriage.