If you receive an inheritance, your first instinct might be to share the windfall with your family. Spouses in the midst of - or planning for - a divorce, however, should proceed with caution and take the time to learn how they can protect themselves.
Is an Inheritance a "Marital Asset?"
Pennsylvania divorce law distinguishes between "marital" and "non-marital" assets. In general, marital assets are those that are acquired during the marriage and are subject to equitable division in the case of divorce. Non-marital assets are those that were acquired by one spouse before the marriage or after the date of separation but before the divorce is finalized. Non-marital assets are not subject to equitable distribution.
An inheritance acquired by one spouse, even if during the marriage, falls into a special category. By definition under PA law, an inheritance is considered a non-marital asset. However, this designation applies only if the funds are kept in their own separate account and not commingled with marital assets such as being deposited into a joint bank account or used to purchase property in joint names with your spouse.
Handling an Inheritance
The Bucks County divorce attorneys at Williams Family Law often receive questions about handling an inheritance during an ongoing or pending divorce proceeding. In general, we recommend that most people in that situation open up a separate bank account, in their name only, and deposit the inheritance funds there. If the money is put into a bank account in both spouses' names, or if it is used to purchase a new home or car in joint names, the entire amount could be subject to the rules of equitable distribution.
In addition, if the inheritance includes property or other valuable objects, the inheritor should make certain that any associated paperwork is in their name only.
Other factors can complicate the handling of an inheritance in a divorce. For example, the increased value of an inherited asset such as real estate that appreciates in value or funds in a bank account that accumulates interest during the course of the marriage is considered a marital asset. In other words, the increase in value may be subject to equitable distribution, even if the original inheritance is not.
A prenuptial or postnuptial agreement, detailing the exact distribution method of any jointly owned assets, can supersede general Pennsylvania divorce law. Working with a leading Pennsylvania divorce lawyer to draft a prenuptial or postnuptial agreement can help protect valuable family assets during a divorce.
To seek counsel from a knowledgeable Bucks County and Montgomery County divorce attorney, call Williams Family Law at 215-340-2207. We can help you protect an inheritance during a divorce.