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Protecting your inheritance from asset division

On Behalf of | Oct 14, 2021 | Divorce

If you are facing an upcoming divorce, you have many difficult tasks ahead of you. One of the most challenging for couples of means is separating their marital assets. Since New Jersey is an equitable distribution state, you might not end up with an even, 50-50 division of your wealth and debts. Rather, the courts work to provide a fair portion of joint assets for each spouse, based on factors like income, age and earning ability.  

One item that often comes into question during the division of assets is inheritance. If you have obtained an inheritance before or during your marriage, you have every reason to wonder whether it will be on the table as your marriage dissolves. On the other hand, if your spouse has an inheritance, you probably want to know whether you are eligible to receive part of it during asset division. 

Commingling property 

In general, any assets you bring into the marriage are personal assets and not part of marital property unless you combine them into a joint account or otherwise commingle them with joint property. This includes personal injury awards, individual gifts and inheritances. No part of your inheritance will go to your spouse as long as you keep it separate from any joint ventures, including: 

  • Depositing part or all of any inheritance money into a joint account or an account to which your spouse has access or ownership 
  • Withdrawing money from an inherited trust and depositing it into your joint account 
  • Using inheritance money for joint expenses, such as vacations, family purchases or household expenses 
  • Using inherited property as the family home or adding rent collected from inherited property into the joint bank account 
  • Making home improvements on jointly owned property using inheritance funds 
  • Allowing your spouse to participate in the upkeep, repairs or maintenance of inherited property 

Even an accidental commingling can damage any chances of keeping an inheritance separate, but good documentation might help to reverse the commingling in the court’s eyes. It will be important to demonstrate your intent to keep the inheritance separate, and this is where a solid prenuptial or postnuptial agreement comes in handy. However, even the terms of a marital contract can become invalid when a spouse fails to remain diligent about keeping inherited property separate from marital assets.