Receiving an inheritance can make a world of difference in one’s financial outlook. Deciding how to spend, save or invest those funds is a serious matter, and deserves careful attention. When an inheritance is received by a person who is married, the assets are considered to be that individual’s separate property. However, without the proper care, inheritance funds can be converted into marital property, and subject to property division in the event of a Texas divorce.
The only way to protect an inheritance from property division is to ensure that the funds are immediately placed within an account or investment held solely in the name of the heir. As soon as the funds are deposited into a joint account, they become marital property, and can be laid claim to in the event of a divorce. This is known as commingling of funds, and is essentially the act of mixing money earned from an inheritance with money earned or used by both spouses.
Inheritance funds can become commingled when the account where they are held is used to deposit paychecks or other monies that would otherwise be considered marital property. In addition, when inheritance funds are used to improve a piece of property that is jointly owned or subject to categorization as marital property, commingling has occurred. It is imperative that an individual who inherits a large sum of money seeks guidance on how to protect the asset from division in the event of a divorce.
When a loved one makes the decision to leave an heir a sizeable amount of money, he or she intends for those funds to be put to use by the intended recipient, and not to become part of a property division process. The best way to honor that wish is to handle inheritance money carefully and responsibly. This is an area in which many Texas residents can make use of the services of an attorney or financial advisor.
Source: Bucks County Courier-Times, More Money More Problems: Inheritance and Divorce, Lexie Ridgen, Jan. 13, 2014