Especially for high-net-worth couples, a looming divorce can present serious inheritance issues and how those funds and assets could be divided. In Ohio, divorce assets are either separate or marital property. How that’s determined depends on the nature of how the inheritance assets entered the marriage. This post will explain a bit more about that delineation.
How Ohio Courts Determine Marital vs. Separate Property
The courts will typically look at a range of factors, including:
- Whether the inheritance was acquired during the marriage and intended for both or only one spouse
- Whether the inheritance is traceable (sufficient documentation to verify the nature of the asset)
- What happened after the inheritance – was any part used for marital purposes or otherwise gifted to the spouse?
Combining Inherited Property Makes Things Tricky
As with most marriages, both spouses tend to combine at least some of their assets for practicality’s sake. An excellent example is a joint account that a couple uses for a home down payment and/or ongoing daily expenses. In the event of a split (and if funds remain in that joint account), the courts may deem this money marital property unless the owning party can prove that one spouse’s money went solely to the down payment. If any inherited money lands in this account, it will be difficult to prove that it is separate property.
How to Keep Inheritance Money Separate
There are a few ways to make a clear delineation between what is property of the couple and what isn’t:
- A detailed prenuptial agreement can outline a plan surrounding any potential inheritance and specify how the money will remain separate in the event of a divorce.
- Placing the inheritance money in a trust (living or otherwise) can show that those funds are a separate asset and not subject to equitable division.
- Or, you could keep the money in a separate account, legally separated from any marital accounts or ventures, making it much easier to prove the difference.
Suppose one or both spouses have significant inheritances that they’re bringing to a marriage. In that case, it’s important to understand how the court could split that money in the event of a divorce or how it could remain separate. With the steps that anyone can take pre-marriage to protect this, your first call should be to a qualified divorce law team to understand which steps to take to prepare in advance and what can happen should a split ever be on the horizon.
Call Garretson & Holcomb, LLC today at (513) 863-6600 to learn more and schedule a free consultation.
