How to Protect Inheritance Money During Divorce in Ohio

You’ve been diligent about your estate planning, and left a sizable chunk of your estate to one of your children. But what happens if your child receives an inheritance, then gets divorced? Will part of the inheritance money go to your child’s ex-spouse? Not necessarily. There are ways to protect inheritance money during divorce.

In an Ohio Divorce, Assets Are Classified as Separate or Marital Property

In Ohio, inheritance money that is not properly protected can be classified as marital property that will be divided equitably between the beneficiary and his or her ex-spouse. But with a little bit of planning, you can avoid having property you leave to one of your children end up in the wrong hands. And in the process, you can eliminate a potential source of costly and protracted litigation during your child’s divorce proceedings.

During a divorce in Ohio, assets are classified as either marital property or separate property. To determine whether property is marital or separate, Ohio courts consider the following factors:

• Duration of the marriage
• Assets and liabilities of the parties
• Property liquidity
• Desirability of retaining an asset intact or retaining an interest in an asset
• Tax consequences of property division
• Retirement benefits of each spouse
• Any other factors the courts find to be relevant and equitable

Separate property includes real and personal property that falls into one of the following categories:

• An inheritance by one spouse during the marriage
• An interest in property acquired by a spouse prior to the date of the marriage
• Income or appreciation in value of separate property occurring during the marriage that is not attributable to the labor, monetary, or in-kind contribution from either spouse
• An interest in or ownership of property occurring after a legal separation
• Property declared to be separate property in a valid pre-nuptial agreement
• Gifts of property acquired during the marriage that are clearly designated for only one of the spouses

Commingling Can Make a Separate Asset Marital Property

Looking at the definition of separate property, it would appear that separate property is any property left to one spouse. But be careful - commingling separate property with marital property could destroy the identity of the separate property, making it marital property that must be shared between the divorcing spouses.

A common example of commingling is when a spouse receives an inheritance and deposits the inheritance money into a joint bank account. Another example is when a couple uses one spouse’s inheritance as a down payment to purchase a home. Unless the spouse who received the inheritance can prove the inheritance money went to purchase the home, a court might declare that the down payment was marital property.

Keep Inheritance Money Separate

To protect inheritance money during divorce, you want to avoid having property classified as marital property. To do so, it is important to be able to trace the source of the inherited property by maintain records proving that the inheritance was separate property.

There are a few steps you can take to preserve the separate identity of an inheritance.

• Prenuptial Agreement. A well drafted pre-nuptial agreement will identify the inheritance and specify that it will remain separate property in the event of a divorce.
• Keep the Inheritance Separate from Marital Funds. Keeping the inheritance in a separate account preserves its nature as a separate asset and makes it easier to prove to a court that the inheritance is not a marital asset.
• Place Inheritance Money in a Trust. A trust for the inheritance money can specify that the inheritance money is a separate asset that is not subject to a property division during a divorce.
• Document the Inheritance. At a minimum, it’s a good idea to save papers that deal with the inheritance and state that it was given to just one spouse.

Questions About How to Protect Inheritance Money During Divorce? Contact Wolfe Legal Services Today

If you want to protect your child's inheritance in case of a divorce, contact a skilled and experienced Ohio probate and estate planning attorney today.

At Wolfe Legal Services, I work with people throughout greater Columbus, including Dublin, Bexley, Upper Arlington, New Albany, Marysville, Hilliard, Delaware, and Newark, and throughout Franklin County, Delaware County, Pickaway County, Fairfield County, Union County, and Licking County. Call (614) 263-5297 any time or complete our online form.