Getting married can be an extremely happy time in a person’s life. During this time, you may be focused on the wedding day and your upcoming honeymoon. However, spending some time on a properly-drafted prenuptial agreement could ensure your future happiness, even in the event of a divorce. Protecting assets received as an inheritance, for example, is made much easier with an effective prenuptial agreement than doing so without one. As a result, it is important to stress that during a divorce proceedings, absent a prenuptial agreement, it may be too late to protect vacation homes, rare collectables, and other inherited assets.
Strategies for Protecting Inherited Assets in Divorce
In Illinois, the law draws a distinction between marital property and separate property, specifically recognizing inherited assets as non-marital property in most cases. However, inherited assets that are combined with marital assets and used for family purposes can lose their identity as separate property, regardless of a person’s intentions. With that in mind, there are a few strategies for protecting inherited assets during divorce:
- Pre/Postnuptial Agreements: Well-negotiated prenuptial and postnuptial agreements are great tools for shielding inherited assets if the divorce ends up in court. These agreements can allow either spouse to give up the rights to any inheritance or other major gift received by the other spouse during or before the marriage. An express waiver of these rights can prevent future conflict down the road;
- Documentation: Another great tip for protecting inherited assets is saving and storing all documentation related to the inheritance, especially paperwork that indicates that the inheritance was intended solely for the inheriting spouse. A copy of a gift tax return for the inherited asset can be especially persuasive in divorce court, because it contains a section where the intended beneficiary can be named.
- Separate Accounts: The commingling of inherited assets in accounts containing marital assets and property can cause inherited assets to be considered marital property. As a result, maintaining separate accounts after marriage can prevent the commingling of inherited assets with marital property in order to support future claims that the inherited assets should not be considered marital property.
- Trust Utilization: Trusts are great tools that can prevent inherited assets from going to the other spouse during divorce. This is because a trust agreement can contain specific provisions that prohibit inherited assets from being considered marital property during divorce proceedings.
- Maintain Titles in One Name: When there is no prenuptial agreement, maintaining titles of inherited assets in the name of the heir is the best way to protect separately owned properties. However, it must be noted that the use of the property as a vacation, residential, or commercial space can still affect the status of the property in certain cases.
Though prenuptial agreements are the best tool for protecting inherited assets, the use of trusts and other strategies can also ensure that inherited assets are not considered marital property during divorce proceedings. If you need legal assistance with a divorce case or any other family-related issues, contact the Kane County family law attorneys at Pucci Pirtle today.
Source:
http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2086&ChapterID=59
DIVISION OF PROPERTY