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Keeping your inheritance safe from divorce

Texas is a community property state, which means that any property attained during the marriage belongs to both spouses. Since inheritance money is considered separate property, there's a good chance your spouse will not be entitled to any of it in the divorce. However, this is not always the case! Factors such as where you host the money and/or how you've spent it could alter who gets what in the divorce.

For those who are currently married and seeking a divorce

The financial structure of your marriage and how any inheritance money was spent could cause issues when dividing assets. Your inheritance will be safer if it was set up in a separate account that only has your name on it. It will be much more difficult to prove ownership if the inheritance was deposited into a joint account.

Did you spend any of the inheritance money on marital assets? This is where things get tricky. Let's say you bought a car with some of the inheritance money and put it in both of your names, that car is now considered community property. It doesn't matter that it was your inheritance that bought the car because both of your names are on the title.

For those who are about to get married

There are a few more options for those of you who are not yet married but want to keep your inheritance safe in the event of divorce. Suggesting a prenuptial agreement is a good place to start. This can be a challenging conversation to have with your soon-to-be spouse, but legally it will be your safest bet. Should you decide to have a prenuptial agreement drafted; it will be wise to consult an attorney to help guide you through the process.

You may not be comfortable with the idea of entering into a marriage with a prenuptial agreement, which is understandable. If that is the case, make sure your inheritance stays in a separate account with only your name on it. Do not put inheritance funds into a joint account unless you are okay splitting it 50/50 in a divorce.

Be thoughtful when spending inheritance money on marital assets. As stated in the "currently married" section above, this is where things can get tricky. When you spend inheritance money on marital assets, your spouse automatically has ownership of that property. If you find yourself in a situation where you need to use inheritance to fund a significant purchase (i.e. house, car, etc.), either put the asset in your name or draw up a legally binding agreement that allows you ownership of said property should your marriage end in divorce.

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