Protecting Your Inheritance During Divorce

Money or property that is inherited by a spouse during marriage is usually treated differently from other marital assets in divorce. Under Maryland law, assets acquired by either spouse while married are generally considered marital property, belonging to both of them. However, what happens to an inheritance in divorce will depend upon a number of factors, including how the inheritance assets were handled during the course of the marriage. If you received an inheritance or are expecting one — and you’re considering parting ways with your spouse — it’s essential to understand what steps you can take to protect the property you’ve been bequeathed.

Understanding How Property is Divided in a Maryland Divorce

Before you understand what happens to an inheritance in divorce, it’s vital to have knowledge of Maryland’s property division law. Specifically, in divorce, assets are characterized as separate property or marital property. Property that is acquired by a spouse before the date of the marriage is considered separate property and goes back to the original owner upon divorce. Any assets, income, or property that either spouse acquires during the course of the marriage is considered marital property and would need to be divided when the couple decides to part ways.

When it comes to dividing property in divorce, Maryland follows the rule of equitable distribution. This means that a court would allocate marital assets and property in a way that is deemed fair to both parties. Equitable does not mean equally.

What Happens to an Inheritance in Divorce?

An inheritance can take the form of real property, personal property, or money. Typically, any assets acquired through an inheritance are not considered marital property — regardless of whether the inheritance was received before or during the marriage. Rather, property left by will, trust, or beneficiary designation is usually classified as separate property and belongs to the spouse to whom it was left. But there are exceptions to this rule, depending on how you treat the inheritance during the marriage.

Under certain circumstances, an inheritance can be commingled with marital property. If an inheritance is mixed with marital assets and used for marital purposes, it may be split between the spouses in a divorce. Examples of commingling an inheritance with marital assets can include the following:

• Depositing an inheritance into a couple’s joint account
• Using inheritance funds to make improvements to the marital home
• Purchase the spouse a car with the other’s inheritance funds
• Using inheritance funds to pay a mortgage
• Paying marital bills with inheritance funds
• Using the inheritance to start a family business
• Selling inherited property and using the proceeds for marital purposes

There may also be situations where an inheritance was given to both the decedent’s family member and their spouse. If the assets were bequeathed to the married couple, rather than one spouse individually, the inheritance could be subject to division in divorce.

How Can You Protect Your Inheritance in Divorce?

If you receive an inheritance while you are married, there are a few steps you can take to protect it in the event you and your spouse part ways. To avoid commingling an inheritance with marital property, it’s crucial to be cautious how you use the funds. Be sure to deposit the inheritance funds into a separate account that only you can access — this can help to safeguard it from being mixed with marital assets and ensure it is not subject to division in divorce.

In addition, if you were given the inheritance before you were married, it’s best to make sure that it remains in the account it was put into and funds are not removed to pay for any marital expenses (even if it is agreed upon that the inherited funds used for marital purposes would later be repaid). Importantly, keep all documentation showing that the inheritance is separate property. This includes the decedent’s will or trust instrument, and any bank statements that show the transactions, withdrawals, and deposits regarding the account.

Another way to protect your inheritance in divorce is with a valid prenuptial or postnuptial agreement. While a prenuptial agreement is entered into before marriage, a postnuptial agreement can be executed at any time during the course of the marriage. These documents serve as contracts that can outline each spouse’s financial rights and obligations in the marriage. They can also specify how certain assets and property will be classified and divided in divorce, including inheritances and gifts received during the marriage.

Contact an Experienced Maryland Divorce Attorney

Dividing property in divorce can be complex, especially if there are inheritances involved. It’s best to have the representation of a knowledgeable attorney who can advise you regarding your rights and protect your interests. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce lawyers are committed to guiding you every step of the way through the divorce process. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we will work closely with you to achieve the best possible outcome in your case. To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (301) 658-7354 or contact us online.