If you received an inheritance anytime during your marriage, you might be wondering what that will mean during your divorce. The division of assets can be one of the most challenging parts of the divorce proceedings.
You’re likely worried about whether your spouse has any claim on your inheritance. What can you do to protect what is rightfully yours?
Types of property in a divorce
First, it’s essential to understand the difference between community (or marital) property and separate property. Community property is typically anything you and your spouse bought during your marriage, like your house or retirement funds. Separate property is the assets you owned before your wedding, like your car.
However, separate property can also be assets you bought during the marriage that is in your name only – such as an inheritance.
Comingling of assets
Colorado divides property through equitable division, meaning your marital assets will be available for division fairly but not always equally. Only marital assets are available for division in Colorado, but there are instances where your inheritance could also be eligible.
This typically occurs if your inheritance became comingled. The comingling of assets occurs to separate when you and your spouse have the same level of access to it. For example, if you have $5,000 of inheritance that you deposit into a joint bank account with your spouse, it will likely be comingled and, therefore, eligible as marital property during your divorce.
Protecting your inheritance
If you want to ensure that your inheritance is ineligible for property division, there are two steps you should take:
- Keep it separate. While it may seem easier just to transfer a monetary inheritance into a joint bank account, this can hurt you in the future during a divorce. Instead, your inheritance into a separate account that is solely under your name. If your inheritance isn’t money but a house, you should ensure that the title of the house is only in your name and that your spouse does not contribute to it, such as paying for repairs as that can turn the house into marital property as well.
- Keep all the documentation. Inheritances can quickly become marital property if you don’t have the documentation to prove otherwise. In situations where you may have accidentally comingled your inheritance, having the documents to verify that the inheritance was left for you is your best bet to have it rectified.
It’s important to take measures to protect your inheritance sooner rather than later. Even if your inheritance becomes comingled, you may be able to fix it with the help of an experienced attorney. With protections around your inheritance, you can likely rest assured that you won’t have to give a part of it away to your spouse during a divorce.