Posted on: 2 April 2015Share
Your parents, grandparent or other relative may have left behind an inheritance to help ensure you have a more solid financial future. Whether this money was willed to be used for educational purposes, to invest in a business or simply to spend as you please, it's important that you know how to keep your inherited money protected. A marriage isn't just the joining of two people, but also the joining of your finances. If you don't know how to protect your inheritance, in the event of a divorce, you could lose some of this money.
Establish an Agreement
If you have an inheritance or trust, it's imperative that you have a pre-nup or a post-nup. If the money was willed to you prior to marriage, it's best to have a pre-nup in place before you say I do. If the money was willed to you after you were married, consider a post-nup. Each of these agreements work to protect assets that you receive outside the marriage. In many instances, this type of asset is protected during a divorce, but this isn't always the case.
For example, your ex could go to court and argue that you promised to give them a certain amount of your inheritance in the event you two were to split. If your spouse is able to give a compelling argument in court, they could be successful in their claim. When you have a pre-nup or a post-nup in place you can clearly state that your ex is not entitled to your inheritance in any way upon divorce, alleviating a long legal battle.
Don't Mix these Funds
It's also important that you don't mix your inheritance with other funds in your home. For example, if your inheritance is disbursed to you monthly or annually, don't put this money in an account you share with your spouse. When you co-mingle funds, you blur the line between what's your own and what's shared property in your marriage.
In addition to keeping the money in separate accounts, it's also important to ensure you aren't using the money to pay for any shared property, such as your home. If your ex is awarded the home in a divorce, your inheritance could be classified as household income. This would require you to continue using your inheritance to help make the mortgage payment. The best way to protect your inheritance is to keep it separate.
Your inheritance or trust was willed to you. Make certain you are doing your part to keep it protected. Talk to experts like Flett Manning Moore for more information.