Imagine Aunt Martha died when you were 23 years of age, before you got married, and you inherited a large sum of money from her. You put the money in an annuity, and it’s been growing steadily ever since. When you turned 30, you got married, and now — just as you turn 40 — you’re getting divorced.
What will happen to your inheritance from Aunt Martha? You’re counting on this inheritance to pay for your retirement one day, but now you’re worried you could lose a large chunk of it in your divorce proceedings.
Much of what happens to premarriage inheritances depends on what the spouse did with the money after getting married. If, for example, you deposited the inheritance money into a jointly held financial account, your soon-to-be ex will likely be able to take part of it in your divorce proceedings. If you maintained the assets in a separate account, your spouse will probably not get to take any of the inheritance.
That said, your spouse may have a viable claim to make on earnings generated by your inheritance while you were married. For example, imagine your inheritance grew by 50 percent during your marriage. Your spouse may be able to get part of those earnings that happened during your marriage.
For spouses who have inheritances and are planning to get married, a premarital agreement or postmarital agreement could be an excellent way to protect your financial interests. Whatever your current marital situation happens to be, safeguarding your inherited assets from a failed marriage is possible if you plan ahead and make the right choices ahead of time.
Source: FindLaw, “Inheritance and Divorce,” accessed Nov. 24, 2017