Inheritance & Divorce: Tips for a Smooth Process and Avoiding Disputes

When divorce and inheritance intersect, things can get complicated.  Naturally, you’ll want to avoid a dispute over inherited assets, including the prolonged legal battles and emotional turmoil that can result for all involved.  However, with some planning and expert advice, avoiding inheritance disputes during divorce and ensuring a smoother process is possible.  In this article, we’ll explore some key strategies for navigating these complex situations, including the importance of prenuptial agreements, careful estate planning, and clear communication with all involved parties.  Whether you’re going through a divorce or simply want to be prepared for the future, this guide will provide the knowledge and tools to protect your inheritance, minimize stress, and increase clarity.  So, let’s dive in and start setting up a smooth and conflict-free divorce process.

Understanding Inheritance and Divorce

To understand how inheritance and divorce intersect, it’s essential to know what inheritance is and how it is treated in divorce.  Inheritance is property or assets passed down from generation to generation.  In most cases, inherited property is subject to division during divorce.  However, this does not mean that a court will necessarily divide an inheritance equally.  In addition, prenuptial or postnuptial agreements may carve out inheritances from the property divided during divorce.  In other words, when inheritance is involved, divorce and things can get complicated quickly.

If you’ve separated out inherited property from marital property in a prenup, sometimes you can undo that by comingling the inheritance with marital assets.  For example, if you inherit money and deposit it into a joint bank account with your spouse, that money may be considered marital property and subject to division.  Additionally, if you use inherited money to purchase a joint asset, such as a home or car, that asset may be subject to division during divorce.

Even when you don’t have a prenup, courts will consider whether you comingled the inherited assets or spent them on joint expenses or assets when they decide whether and how to divide the inheritance.

Read: Inheritances, Gifts, and Divorce

Common Inheritance Disputes During Divorce

Inheritance disputes during divorce can arise for many reasons.  However, some of the most common disputes include issues around the following:

1.  Commingling of assets: As mentioned earlier, if a spouse comingles inherited assets with marital assets, it can be challenging to determine how to treat them, even when there’s a prenup.

2.  Valuation of assets: In some cases, inherited assets may appreciate in value during the marriage, making it difficult to determine how to value them.

3.  Inheritance received during the marriage: If one spouse inherits property during the marriage, it can be challenging to determine whether and how to divide it.

Download: Connecticut Comprehensive Property Division Guide

Steps to Take to Avoid Inheritance Disputes

It’s crucial to take some proactive steps to avoid inheritance disputes in the event of a divorce.  Here are some strategies to consider:

1.  Get a prenuptial agreement: If you plan to get married and have inherited or anticipate inheriting property, consider getting a prenuptial agreement outlining how your assets will be divided in the event of a divorce.  If you are already married, consider a postnuptial agreement.

2.  Keep your inheritance separate: Avoid commingling it with marital assets, using it on household bills, etc.  Instead, consider opening a separate account or keeping the assets in your name only.

3.  Keep good records: It’s important to keep detailed records of all inherited assets, including documentation of when and how they were acquired.

Read: What Is a Prenup?

Strategies for Addressing Inheritance Disputes During Divorce

The best way to address an inheritance dispute during divorce is to avoid it via open communication and a prenup or postnup.  That said, if you find yourself in a divorce inheritance dispute, there are several strategies you can use to address the issue.  Here are some things to consider:

1.  Choice of Divorce Attorney: Select a sophisticated legal team that understands the ins and outs of the complicated financial aspects of divorce, including handling inheritances.

2.  Mediation: Mediation can be an effective way to resolve disputes outside of court.  A mediator can help both parties come to a mutually agreeable solution.

3.  Negotiation: Even if you’re litigating, negotiation can be an effective way to reach a settlement.  This involves both parties coming to the table and working together to find a solution.  This will help you avoid a protracted court hearing with a difficult-to-predict result.

Read: Settlement & Divorce

Benefits of Prenuptial Agreements in Avoiding Inheritance Disputes

One of the best ways to avoid inheritance disputes during divorce is to get a prenuptial agreement.  A prenuptial agreement outlines how your assets will be divided in the event of a divorce, including any inherited property.  Here are some of the benefits of prenuptial agreements:

1.  Protects your inheritance: A prenuptial agreement can protect your inherited assets and set them up to remain separate property.

2.  Reduce stress: A prenuptial agreement can reduce stress and conflict during divorce proceedings.

3.  Provides clarity: A prenuptial agreement clarifies how assets will be divided, which can help prevent misunderstandings and disputes with your spouse.

If you are already married, speak with us about whether a postnuptial agreement might be an option.

Read: Understanding the Limitations of a Prenuptial Agreement

Read: What Is a Postnup?

Working with a Mediator or Attorney

If you’re dealing with an inheritance dispute during divorce, working with an attorney or mediator focused on complicated divorces is essential. However, this is not the time for a generalist.  Here are some things to consider when choosing a mediator or attorney:

1.  Experience: Work with a team experienced in inheritance and divorce cases.

2.  Reputation: Look for an attorney or mediator with a good reputation in the legal community.

3.  Communication: Working with a legal team that communicates effectively and keeps you informed throughout the process is essential.

Read: Benefits of Divorce Mediation

Read: 4 Things to Know Before You Hire a Divorce Attorney

Next Steps

Inheritance disputes during divorce can be challenging and emotional.  However, with careful planning, communication, and expert advice, avoiding disputes and ensuring a smoother process is possible.  Remember to keep your inheritance separate, communicate openly with your spouse and family members, and consider getting a prenuptial agreement.  If you find yourself amid an inheritance dispute, work with an attorney or mediator experienced in these types of cases.  By taking these steps, you can protect your inheritance, minimize stress, and increase clarity.

Please contact us if we can be of assistance.