As Minnesota is an equitable distribution state, many individuals facing divorce worry what this means for their property. The concept of equitable distribution allows for assets and debts to be thoroughly examined and divided in a fair way – not necessarily a 50/50 split.
The court will look at assets and debts to determine if they are marital or separate property. In general, marital property is subject to division while separate property is not.
Not all assets are considered marital, even if they are acquired during the marriage. Knowing which ones are subject to property division can prove helpful if you want to avoid conflict.
Answer the questions below to find out if your inheritance is at risk.
Did you combine it with marital property?
When you combine property with a marital asset, it becomes available for you and your spouse to use.
For example, you might have deposited your cash inheritance in a joint bank account. If both you and your spouse have been depositing and withdrawing from it, the inheritance becomes commingled.
But if you keep it in a separate account under your name, it remains solely yours.
Suppose you are renting your inherited house. In that case, you should keep the rental income separate from your joint income.
Did you use it to pay for joint expenses?
An inheritance also loses its separate status when used to pay for your and your spouse’s expenses.
These expenses include joint contributions, debt payments, property purchases, and business ventures.
On the other hand, spending joint funds on repairs and upkeep of an inherited house can also turn it into marital property.
Did you include an inheritance clause in your pre/postnuptial agreement?
A prenuptial or postnuptial agreement is a document that defines your and your spouse’s financial and property rights in case of a divorce. If you are expecting to receive an inheritance, including it in the agreement provides you better control over it.
Knowing how to keep your inheritance separate is necessary if you cannot assert this safeguard. You can also turn to a legal counsel or financial advisor for help building proper documentation and defense from claims by your spouse’s creditors.
A person’s financial situation can change at the drop of a dime. Protecting your inheritance is part of planning not just for your future but your children’s as well.
