Inherited property will usually be viewed as separate property in a divorce – and therefore not subject to division. However, there are exceptions to this rule. A prenuptial agreement can help avoid unanticipated loss of property in a divorce.
One of the purposes of a prenuptial agreement is to establish the financial terms of divorce – including how inherited property is to be handled. Couples can use a prenuptial agreement to protect property inherited prior to marriage – which is at risk of becoming commingled – or property inherited after marriage, which a spouse may be able to lay claim to.
When can inherited property be at risk?
Let’s consider inherited real estate, for example. Whether the real estate is inherited prior to marriage or during the marriage, a spouse may be able to lay claim to part of its value in a divorce if they made contributions to its improvement. A prenuptial agreement can clearly establish that the property will remain the sole possession of the inheriting spouse, regardless of any contributions made by the other spouse.
The same goes with an inherited business. Prenuptial agreements can specify that the non-inheriting spouse may lay no claim to the value of the business in divorce, regardless of any contributions they make during the marriage.
A prenuptial agreement can also prevent a spouse from forcing the division of inherited property if it is determined that the judgment of divorce or separate maintenance is inadequate to support them.
Creating a strong prenup
As we’ve discussed in previous posts, prenuptial agreements can be used to achieve a wide range of outcomes in both a marriage as well as a divorce. The key with prenuptial agreements is to make sure they are drafted carefully and executed properly. Without taking care to do things correctly, prenuptial agreements can simply become another thing for couples to fight over in divorce, so it’s important to work with an experienced family law attorney.