Many believe that an inheritance received during a lifetime or through a will is untouchable, a financial gift that remains entirely theirs regardless of future circumstances. However, in the state of Connecticut, inherited assets can become entangled in divorce proceedings, potentially putting your family legacy at risk.

Understanding how inherited assets can be at risk in a divorce and proactively planning to protect them is essential for safeguarding what’s meant to remain within the family.

How Inherited Assets Become Vulnerable in Divorce

Inherited assets, even if initially kept separate, may be considered marital property under certain conditions. Factors that can blur the lines between separate and marital property include:

• Commingling Funds: For example, depositing inherited money into a joint account used for shared expenses can make the asset appear marital.
• Using Inherited Property for Joint Purposes: If a vacation home is inherited but used as a primary residence or rented out to contribute to shared income, its status as separate property could be challenged.
• Failure to Document the Asset’s Separate Nature: Without clear documentation and effort to keep the asset separate, it’s easier for the other spouse to argue for inclusion in the marital estate.

 

Related Post: So You Inherited a Property. Now What?

 

Legal Tools to Protect Inherited Assets

The good news is that there are strategies to minimize the risk of losing an inheritance in divorce. Here are some of the most effective tools to consider:

1. Trusts:
   • Placing an inheritance into a trust is one of the most robust ways to protect it. A properly structured trust can keep the asset separate from marital property, as the terms of the trust dictate how and to whom distributions are made.
   • Irrevocable Trusts can provide even stronger protection by placing the asset beyond the control of the beneficiary and their spouse.
2. Prenuptial Agreements:
   • A prenuptial agreement is a legal contract entered into before marriage that explicitly states how inherited assets will be treated in the event of a divorce.
   • This agreement can ensure that any inheritance received before or during the marriage remains the sole property of the named beneficiary.
3. Postnuptial Agreements:
   • Similar to prenuptial agreements, postnuptial agreements are executed after marriage and can be used to address concerns that arise later.
   • These agreements can clarify ownership and help avoid disputes if the marriage ends.
4. Maintaining Separation:
   • Keeping inherited funds in a separate account and ensuring that they are not used for marital purposes is a practical way to avoid commingling.
   • Similarly, inherited real estate should not be retitled to include a spouse’s name or used for shared income or debt obligations.

 

Related Post: Estate Planning and Divorce

 

Why Planning Ahead Matters

While divorce is never a planned event, addressing the potential for inheritance disputes early can prevent stress, loss, and family conflict down the road. Open communication with your family, trusted legal advisors, and financial professionals can help create a clear plan that aligns with your goals.

Partner With Legal Experts

At Reed Wilson Case we understand the deeply personal and financial implications of protecting inherited assets. Whether you’re looking to create a trust, draft a prenuptial or postnuptial agreement, or simply seek advice on maintaining the separate nature of your inheritance, our experienced team is here to guide you every step of the way.

To learn more about how we can help, contact us today. Let’s work together to secure your legacy for generations to come.

Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only.

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