An inheritance can be treated differently than other marital assets during a divorce, depending on how it is used. If a person choses to maintain sole ownership over an inheritance, than it cannot be claimed by the spouse. However, if that inheritance becomes comingled with other marital property, than the situation can become quite unclear.
What is Marital Property?
Marital property is property that is acquired by one or both spouses during the marriage. It does not necessarily have to list the names of both spouses on the title to be considered marital property. Under Maryland law, property in this case is considered any tangible item that is of value. It can include land, but it can also mean a residence, cash, stocks, retirement accounts, business assets, or motor vehicles.
The division of the assets has a lot to do with the method in which the property was acquired as well as the timing. If property was acquired using joint assets during a marriage, that property is then considered as a product of the marriage. If someone made the purchase prior to the relationship using their own funds, it should be protected from being divided among the parties.
Is My Inheritance Safe in a Divorce Settlement?
An inheritance is treated differently than other marriage property because it is still considered the sole possession of the person who received the inheritance, even if they received it during the marriage. As long as the inheritance remains isolated from the other spouse, it is protected from being divided up in a divorce proceeding.
However, if the recipient decides to comingle it with other marital property, then they will lose their status as separate property and become eligible to be factored into any type of divorce settlement. For instance, if a wife inherits a sum of money from a relative and takes that money and deposits it into her own bank account that has just her name on it, then it is considered separate property. If she takes that same inheritance and uses it along with other money she accumulated with her husband to purchase a home, then it becomes eligible for the husband to claim a portion of.
While inheritance will not factor into a final settlement on a divorce proceeding, it could have an impact on calculating alimony. Since the courts consider all forms of income and assets when determining alimony, an inheritance can play a factor in how much one spouse must pay to the other.
The best way to avoid comingling funds is to keep all inheritance money separate and away from any joint ventures that the couple plans to engage in. The primary reason people need to be wary of how their individual assets are divided up is because Maryland is an equitable distribution state.
What is an Equitable Distribution State?
Maryland is an equitable distribution state, meaning that the courts attempt to distribute marital assets fairly. While it may seem as if the name implies equal division, that is not the case. What it means is that the courts will distribute marital assets in a fair manner based on the facts of the case. When deciding on how best to divide a couple’s marital assets, only marital property is subject to division. Separate property, which consists of assets and income acquired before the marriage, is not considered.
Gifts and inheritances received by one spouse alone during the marriage are also considered separate party as long as they remain separated. Marital property, on the other hand, remains an option for the courts to divide fairly among the ex-spouses, assuming both members treated those assets fairly.
What Happens if My Ex-Spouse Wastes Our Marital Property?
Dissipation is when one spouse wastes marital property or uses it for reasons that are not related to the marriage itself. This could happen as the marriage begins to crumble and resentful feelings start to appear in the relationship. In response to those negative feelings, one of the two may decide to use marital assets on themselves. It could be taking money from a joint fund to pay for a trip with a significant other or to make an extravagant purchase, such as a car or a boat.
If the courts determine that one of the two is guilty of dissipation, it will treat the marital assets as whole. In other words, it will calculate the fair and equitable distribution of assets based on the amount that existed before the spouse wasted the money. The motivation for this rule is to discourage either one from unnecessarily spending money from the marital assets.
How can I Keep My Inheritance Safe?
If a person is looking for added protection of an inheritance, another way to ensure that it is safe from the courts is to include it in a prenuptial agreement. This is an agreement between the spouses before they get married that determines ahead of time how they will divide their assets if they get a divorce. It is a way for one person who enters a marriage with more assets than the other to protect those assets. While an inheritance is generally safe from the court, a person might feel the need to have some additional legal protection and choose to include that inheritance in a prenuptial agreement.
Another option for a person who is determined to protect their inheritance is to place those assets within an offshore asset protection trust in combination with a limited liability company (LLC). The LLC itself will hold a person’s bank and investment accounts in a secure bank that is located internationally.
Typically, a person who comes into an inheritance should keep those assets separate from their spouse. Leaving it in a bank account that does not include the spouse’s name will prevent it from being comingled with marital assets. For questions about how one’s inheritance will be affected by divorce, one should speak to a lawyer for guidance.
Towson Divorce Lawyers at Huesman, Jones & Miles, LLC Help Clients Protect Their Inheritances During Divorce
If you are going through a divorce and are worried about protecting your inheritance and other assets, the Towson divorce lawyers at Huesman, Jones & Miles, LLC know related laws and your rights and can help you protect the assets. Call us at 443-589-0150 or contact us online for a free consultation. Located in Hunt Valley and Towson, Maryland, we serve clients throughout Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, and Howard County.