An inherited asset can be money, property or valuable items. Anything of financial value can count as an inheritance under New York law, as long as it’s received through a will, trust or estate.
In contemplating divorce, you might wonder how it affects these assets. How you handle your inheritance during marriage can change what happens to it in a divorce.
Losing or keeping your inheritance during a divorce
In New York, inheritances usually stay separate and are not subject to division in a divorce. However, if you ‘commingle’ or mix them with marital property, like putting inherited money into a joint account or using it for joint expenses, it could lose its separate status. This mixing is called transmutation.
Courts look at these things to decide if an inheritance becomes marital property:
- The intent behind any mixing of assets
- How long the inheritance was combined with marital funds
- How the inheritance was used during the marriage
Keeping clear records of your inherited assets and how they’re used is very important. This helps prove they remained separate.
Protecting your inheritance
While it may be challenging if you’re already contemplating divorce, try to avoid using inherited assets for joint marital purposes if you want to protect them in case of a divorce. Keeping inherited assets separate, such as avoiding using inheritance for joint expenses, is a way to prevent commingling.
A postnuptial agreement (postnup) is another legal tool you can consider. A postnup can clarify that your inheritance is separate property, providing an extra layer of protection. You can also establish a trust to protect inherited assets from division. But keep in mind that courts may scrutinize these arrangements, especially if a spouse creates them solely to deprive the other of assets in anticipation of divorce.
Consider seeking an attorney experienced in family law when making legal decisions about your inheritance. They can provide guidance about your assets in the event of a divorce.