If you receive an inheritance and later decide to get divorced, you do not want these funds to be subject to property division during the divorce proceedings. Even if divorce is not on your mind at this point, you would likely want your inheritance to be treated differently than your joint assets if you did end up ending your marriage.
When you start the estate planning process, the key is to maintain separate property from your spouse. For example, if you deposit one of your spouse’s paychecks into the same account as your inheritance, even by accident, you now have commingled funds.
During the estate planning process, there are steps you can take to prevent commingling. First, start by documenting the source of the wealth involved as an inheritance or a gift. Then, keep your inheritance in a separate account and perhaps even at a separate financial institution than your other accounts to avoid any risk of commingling.
Another way to protect your inheritance during the estate planning process is to safeguard it in a revocable trust. With a revocable trust, you can make changes to the property held within it at any time. A revocable trust owns the property held with it, and you, as the trustee, maintain control over it.
Keep in mind that if you create a revocable trust, you will also need to create your will carefully. In your will, you must include language that ensures the trust is separate from your other marital property.
Do you have any questions? We are happy to help with your estate planning needs, so contact our law firm today.