Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

PROTECTING INHERITED ASSETS IN CASE OF DIVORCE

For those happily married, there are usually no objections to sharing gifts received from parents or grandparents. In contrast, when divorce is on the horizon the sharing of gifts is not an option. Unfortunately, past actions may subject those gifts or bequests to joint ownership and division upon divorce (separate versus marital property). To avoid this potential land mine it is important to consider the following options:
 
 
These agreements can protect inherited assets (business, property, art collection, etc.) should a divorce occur. Each spouse can agree to forgo his or her rights to any inheritance or major gift given to the other spouse before or during the marriage.
 
Maintain Separate Accounts:
 
Inherited or gifted funds should be maintained in a separate account so that it is not commingled with the other spouse’s assets or marital funds. 
 
 
Utilization of a Trust can prevent a gift from becoming a marital asset. For example, the Trust could own a gifted residence and charge the couple rent to live in it while they remained married, or financial account and preclude it from being a marital asset at divorce.
 
Keep Title in One Name:
 
Maintain ownership solely in the inheriting or receiving spouse’s name alone. However, the way in which the property is used and from what source its maintenance expenses are paid can change its classification from separate to marital property.