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Can I protect my inheritance in divorce?

On Behalf of | Jun 16, 2023 | Asset Division

Money troubles are at the heart of a lot of divorces, but sometimes it’s not the absence of money that causes conflict. A large influx of wealth can also be the source of disputes, especially if a couple has vastly different financial habits and goals. Put a “saver” and a “spender” in the same household, for example, and money can become a topic of many fights.

New Jersey law states that inherited assets are the separate property of the inheritor, and they aren’t subject to the normal rules of equitable division in this state – but like just about everything in the law, there are exceptions to every rule.

Commingling is a potential problem

What usually creates a big complication is when the spouse with the inheritance commingles those assets with their spouse’s assets. When assets are mixed together, what’s “yours” and “theirs” is not so distinct – and the law says they’re subject to the normal rules of division in a divorce.

For example, imagine you receive a $200,000 inheritance, and you drop that money into the joint account you share with your spouse. You’ve just commingled that money. Similarly, imagine that you use that money to pay down the mortgage on the house you own with your spouse. That’s also commingling the funds into a shared investment. At that point, it can be difficult for the court to do anything other than simply consider everything marital property.

Prenuptial and postnuptial agreements can help

The best way to protect an inheritance from division in a divorce may be through the use of a premarital or postmarital agreement. If you haven’t yet married, you can ask for a prenup that clearly carves out the inheritance as your own. If you’re already married, a postnup can accomplish the same thing.

Ultimately, you don’t want to start trying to protect your inheritance once a divorce is imminent. The wisest approach is to take definitive action from the very start. Seeking experienced legal guidance can help you explore all the potential options that will help you to achieve your goals.