Many North Carolina residents are fortunate enough to receive an inheritance from parents, grandparents or other loved ones. In some cases, the inherited assets or funds could be substantial or valuable, and deciding what to do with the inheritance is not always as easy as you might think. For example, if you are married, you may think that you should put any inherited funds into your joint account you share with your spouse. But is that the best idea?
Unfortunately, not all marriages stand the test of time, and you could find yourself heading for divorce at some point down the line. While this may not seem pleasant to think about, it is worthwhile to do so if you have received an inheritance or anticipate receiving one in the future because you may need to ensure that you protect those funds or assets should your marriage come to an end.
How could divorce affect your inheritance?
Though your loved one may leave assets specifically to you as an individual, inheritances do not always remain separate property. Even though the law considers inheritances separate property in general, some people could turn their inheritances into marital property if they commingle them with household assets. As mentioned, you may consider putting your inheritance into a joint account. If you do, the inheritance becomes marital property, which means it could be subjected to property division if you get divorced.
Under state law, marital assets are divided as fairly as possible as North Carolina adheres to the equitable distribution laws in divorce cases. If you put your inheritance into a joint account, used funds for the good of the household, made a significant joint purchase with your spouse using your inherited funds or took other similar actions, your inheritance could be on the line for division.
What can you do?
If you have not yet taken any steps that could result in your inheritance becoming marital property through commingling, you may want to keep it that way. This could better protect it in the event of divorce. However, if you have already commingled the funds, it does not mean that you are out of luck. You could negotiate property division terms that allow you to keep your inheritance while offering other assets to the other party as a compromise.
If you have questions about protecting your inheritance or about what you could do to keep as much of your inheritance as possible should you face divorce, you may wish to discuss this specific subject with a knowledgeable family law attorney.