How you can protect inherited wealth during your divorce

On Behalf of | Jan 15, 2025 | Divorce

During a divorce, many types of assets are subject to division between spouses. If you have inherited wealth passed down from a family member, you might understandably wonder if your soon-to-be ex-spouse will get a cut. 

In Massachusetts, inherited assets are not automatically considered marital property. However, they can become subject to division if they become commingled with other assets or used for marital purposes.

Establish inheritance as separate property

Massachusetts follows the principle of equitable distribution, meaning courts divide assets fairly but not necessarily equally. Inherited wealth often qualifies as separate property if it remains distinct from marital assets. For instance, keeping an inheritance in a separate account under the original beneficiary’s name can help preserve its classification as separate property.

Avoid commingling assets

Problems can arise when inherited wealth becomes commingled with marital funds. For example, if a spouse uses inherited money to purchase a home shared with their partner, the court may view it as marital property. Similarly, depositing inheritance funds into a joint bank account can blur ownership lines. To prevent this, inherited assets should remain separate from shared accounts or investments.

Document asset management

Documenting how you manage your inherited wealth can be greatly beneficial. Financial records, such as bank statements or property deeds, can show that the inheritance always remained separate. This documentation can strengthen the argument that these assets are not divisible.

Sign a marital agreement

Creating a prenuptial or postnuptial agreement can also help protect inherited wealth. These agreements allow couples to define which assets to exclude from division in the event of a divorce. This proactive step can provide clarity and prevent disputes over inherited assets.

Protecting inherited wealth during a divorce requires careful planning and management. Understanding the strategies available to you will help ensure that inherited wealth remains secure well into the future.