Is that inheritance really 100 percent yours?

On Behalf of | Aug 6, 2017 | Estate Planning |

When you are married, it is easy for your assets and property to gradually become shared. For example, the car you owned and used alone for five years before marriage may be considered marital property if your spouse used it and especially if his or her name was added to the title.

Inheritances, too, might be considered marital property by a judge.

“Transmuting” an inheritance

Transmuting something means to change its form, substance or nature. Thus, if you take something that was willed only to you and share it with your spouse, you transmute an inheritance. A simple example would be if you inherited your parents’ house and move your spouse and children into it, even putting your name and your spouse’s on the title.

Suppose you decided to sell the house instead and got $200,000. That money went into a joint savings account, and although neither one of you may have touched the account, your spouse’s name was on it. In such a situation, a judge might well decide your inheritance was transmuted into marital property.

The good news is that just because you shared an inheritance does not necessarily mean your spouse is now a 50 percent owner of it. A judge may study how often your spouse used it and/or how much access your spouse had and determine he or she has a, say, 30 percent claim to it, leaving you with 70 percent.

Keeping an inheritance to yourself

It often takes some thought and preparation to ensure an inheritance stays entirely separate. In cases such as receiving money, it can be easier, as you can just set up an account with only your name on it. But what about houses? At the very least, only your name should be on the title. What about artwork that hung in the family room?

What some couples do is sign prenuptial or postnuptial agreements that say any inheritances they receive are theirs alone. In cases such as artwork, it also helps if you can show that money coming from only your own account was used to care for the work.

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