Part of the Texas divorce process is dividing the assets and debts of the couple in an equitable way. As a community property state, Texas requires the fair and just division of all jointly owned property. Although it sounds simple, identifying property that is community property (jointly owned) and separate property (owned by only one of the spouses) can be complicated. Inheritances are an example of the need to be cautious during property division. Is the inheritance separate or is it community property?
7 Tips for Keeping Your Inheritance Separate
An inheritance received by one party before or during a marriage is technically a separate asset. But the recipient of the inheritance must take steps to keep the inheritance truly separate. Otherwise, it could easily become commingled and subject to division as community property during a divorce.
If you inherit money or other property that you wish to keep as separate property, you should follow these seven tips.
- Keep the inheritance in a separate account rather than in a joint account. If the money is in a joint account, the court could easily consider the money to be community property subject to division.
- Likewise, do not commingle funds. Do not deposit money that is normally considered community property, such as a salary check, into the account with the inheritance. This action could turn your inheritance into community property.
- Limit access to the inheritance account. Do not add your spouse’s name to the account where the inheritance is kept.
- Do not accept help from the other spouse. Do not allow your spouse to help for paying taxes on the inheritance itself or on interest generated by the money.
- Limit use of the money to the spouse who received the inheritance. For example, using some of the money as a down payment for a jointly owned home could be seen as benefiting both spouses equally. The money would become community property.
- Do not use the money to pay off shared debt. Like the purchase of a joint asset such as a home, the repayment of joint debt benefits both spouses and the court could find the money to be community property.
- Do not use the funds to pay for a family home. If you inherited a home or other real estate that you and your spouse lived in, then it might become community property, even if only your name was on the deed.
Even if you have done any of these things, you may still be able to prove that the money is separate property. But it could be more difficult, and you could find yourself needing to divide your inheritance in the event of divorce.
Learn More About Inheritance and Divorce
If you are considering divorce and are wondering how the court will view your inheritance, talk with a knowledgeable Texas family lawyer today. An experienced attorney can help you learn how you can best protect your inheritance. Jill and John Setzer serve families throughout Tarrant County from their offices in Southlake, and Trophy Club, Texas.