How you can protect your inheritance from a spouse

Many people who divorce find out the hard way that what they thought was their inheritance only may now belong to their spouse as well.

People in Arkansas inherit all sorts of things-money, houses, cars, artwork and much more. Sometimes, they share their inheritances with their spouse without a second thought only to find out during divorce proceedings that the property that was left solely to them could now be considered marital property.

There is a lot to learn from the mistakes of these people. If someone stands to inherit or is deciding what to do with an inheritance, there are a few ways to protect that inheritance so it never becomes an issue in divorce proceedings.

Avoid commingling the funds

Say that Sally inherits $100,000, and she puts it in the joint bank account she shares with her husband, John. Over the next few years, as they have always done, they draw upon the funds in that account to make mortgage payments and to pay other types of debts. Both of them continue putting money in whenever they can. However, during divorce proceedings, it may be unlikely that Sally can simply say, "I want that $100,000 back," and get it, because John has had equal access to it for years. She commingled her inheritance with her husband's money.

Even if Sally put the $100,000 in her own account with only her name on it, John could still stake a claim to some of it if Sally has a habit of putting marital funds in that account.

In a nutshell, an inheritance needs to be kept strictly separate from anything that could be construed as the other spouse's. This is tricky enough with money but can seem even trickier with property such as a house or artwork. Say that Sally also inherited a house from her father and that she and John lived in it afterward. Does John have a claim to the house, assuming Sally never added his name to the deed?

It can depend on the particulars such as whether he put his own funds into renovations and whether he sold his house to move in and commingled the funds from the sale of his house. A postnuptial agreement can also help clarify the issue. In fact, people who had an inheritance before marriage would be wise to draw up a prenuptial agreement as another layer of protection. Also, for those people considering leaving inheritances and who do not want to risk anyone other than the heir ending up with the asset, there are options such as trusts.

Avoid spending the inheritance on the spouse or on joint purchases

Another way in which someone could "lose" part or all of an inheritance during divorce is by having spent the inheritance. Suppose Josh inherited $50,000 from a parent and used the money to buy a car for his wife. Can Josh then demand and get the car back? Most likely not.

Divorce in Arkansas can get complicated, particularly when inheritances are in the picture. An attorney can help couples figure out how to fairly divide their property.