Inheritances! Yours, Mine or Ours

You’ve just inherited a large sum of money from your great-aunt Esther. Now, what to do with the funds. Do you place the money in a joint bank account? Do you keep the money separate, just in case since you and your spouse have had problems and contemplated divorce in the past? Or do you pay for the much needed roof and other upgrades on the marital home thinking you will get a higher selling price if you need to sell the home?

The first thing you need to understand is if the inheritance will fall under the Marital Property Act as community or separate property. Most states see an inheritance as separate property but some, do not. If an inheritance is seen as separate property you need to know if there are ways a state would see the inheritance as community property.

For the most part, as long as the inheritance is not used for the “benefit” of the marriage for you and your spouse, the funds should remain separate property. However, to protect the inheritance, you should seek the advice of a qualified financial expert and/or lawyer. Additionally, community property states may look at inheritances differently so it is very important that you know how the inheritance will be affected if a divorce should occur.

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