Did you use your own inheritance to help you buy a house? If so, and you’re currently going through a divorce, you’re probably concerned about how that could affect your right to the property, especially if you put your spouse’s name on the title.
Understanding Inheritances
Married spouses may each receive inheritances from their family members, such as when parents or grandparents pass away. By default, the law treats inheritances as separate assets during equitable division in a divorce, which means each spouse gets to keep the assets they inherited before and during the marriage. However, inherited assets can become marital property subject to division in divorce if a spouse commingles their inherited assets with marital finances.
How Joint Ownership Affects Inherited Assets
Although a spouse runs the risk of losing the separate nature of their inheritance if they use those funds to buy a house under a joint title with their spouse, they may still have the right to a credit for inherited assets they placed into a joint asset. However, a spouse must meet specific criteria to have the right to a credit for those inherited assets, including:
- Documentation showing when the spouse received the inheritance
- Documentation showing where the spouse kept their inheritance before using it to purchase or put a down payment towards a family or jointly owned home
- Financial records to track the inheritance money from the spouse to the marital home or jointly owned property to show how the spouse used the money
A spouse who uses their inheritance to purchase a jointly owned property can still receive a credit for that inheritance if they can document which portion of the property’s equity represents their inheritance money.
Protecting Your Inheritance
When you receive an inheritance, there are several ways you can protect that bequest in the event of a divorce. First, you may create a pre- or post-nuptial agreement that expressly designates your inheritance as separate property and gives you the right to a credit if you use inheritance funds to purchase or maintain marital property.
Alternatively, you can keep careful financial records to show the flow of inheritance assets from your separate ownership into a jointly owned marital property, which may entitle you to credit for the inheritance money you put into the property.
What Happens If You Sell the House?
When you sell a jointly owned property to which you contributed your inheritance assets, you may have the right to a credit if you can document how your inheritance assets flowed into the property. If you can demonstrate your entitlement to a credit, then you may receive your inheritance money off the top, with the remaining sale proceeds divided between you and your spouse.
Contact a Family Law Attorney Today
If you’ve recently received an inheritance, talk to an experienced family law attorney about the legal consequences of using those assets to buy a family home or property jointly with your spouse. Contact Lisa Zeiderman today for a confidential consultation with a knowledgeable lawyer to discuss your rights and options.