For those New Jersey residents who are fortunate enough to receive an inheritance, the experience can be life-changing. When a loved one leaves behind a financial gift or a piece of real estate, having that base of wealth can help build a strong financial foundation for the recipient. It is important to protect that inheritance, and to ensure that the assets are used in the manner that was intended. For recipients who are married or planning to marry, that means protecting the inheritance from loss during property division.
Of course, no one goes into a marriage thinking that the union will end in divorce. However, statistics show that many marriages will eventually end. Preparing for that possibility is a wise financial move. Securing a solid prenuptial agreement that specifically address matters of inheritance is the best way to proceed. However, there are additional ways to help protect an inheritance.
The process begins by creating a clear delineation between personal funds and the inherited assets. Maintaining separate accounts is the starting point, but is just the beginning. In order for the two sources of wealth to truly remain separate, there must be no commingling of funds throughout the life of both accounts. That means never using marital or personal funds to cover expenses related to inherited assets, and never using inherited wealth to pay for personal or marital expenses.
Knowing how to properly protect inherited wealth can be a challenge. For those in New Jersey who are considering their options, it may be helpful to speak with a family law attorney about how to proceed. Prenuptial agreements, postnuptial agreements and proper financial management can all play a part in protecting wealth from property division, but these approaches all require a degree of attention and effort.
Source: kiplinger.com, "Strategically Thinking About Divorce", Andrew Bass, April 5, 2017