Why Married Women Should Always Have Separate Finances (2024)

Matters of inheritance can be tricky. Where should I store it? How can I protect my inheritance, myself, and my family? Today, Memphis attorney Lisa Gill of Gill Family Law answers some frequently asked questions about the smartest approach to handling inheritance within a marriage.

When is inheritance considered marital property, and when is it not?

Whether you receive inheritance before or during your marriage, it is almost always considered separate (or non-marital) property. “Inheritance is never considered marital property so long as you take the appropriate precautions to ensure that a court will determine it is separate, and it has maintained the classification of separate property,” adds Lisa.

An inheritance can be considered marital property when one of two things happens: transmutation or commingling. Transmutation occurs when separate property, such as inheritance, has been treated with the intent that it is marital property. For example, this can happen when a spouse inherits a property and then jointly titles it in the names of both spouses.

Commingling, however, happens when separate property and marital property are combined. An example would be if one spouse receives a cash inheritance gift and deposits the money into a joint bank account to which both spouses have access.

What steps can I take to protect my inheritance during a divorce?

According to Lisa, the best first step you can take when you receive an inheritance is to consult an attorney as soon as possible. Not only can an attorney answer questions and give legal advice, but they may also refer you to an estate planning attorney (if they are not one) who can guide you through how to ensure your inheritance is considered non-marital property.

Another important step you can take to protect your inheritance is to have it outlined in a prenuptial agreement. “Inheritance and marital assets can 100% be outlined in a prenup, and I’m a big proponent of that,” says Lisa. “This helps show intent to keep property separate, but you still want to ensure you have adhered to specific measures and guidelines as a safety precaution … It’s always safer to outline everything as specifically as possible to give the court a guide.”

An example of a more complex situation might arise is if a spouse inherits a home. In addition to keeping your spouse’s name off the deed, Lisa says it’s also important to pay attention to how the house is paid — especially if a mortgage or loan is involved. “If it’s not a piece of property that’s owned outright and has some kind of loan or mortgage attached, your spouse may help pay the loan, or you may pay from your marital income,” she explains. “That could result in the court determining that the piece of property has been transmuted.”

Below is a video explaining what you can expect when you work with Gill Family Law — whether you’re seeking advice on marital assets or another topic.

Similarly, if someone is a widow and remarries, and the couple moves into the home the widow owned with their first spouse, Lisa reiterates the importance of keeping the new spouse off the deed if you wish to keep the home separate. “If the second spouse moves in and they’re put on the deed, and then they pay the mortgage or upkeep it with marital income, then it’s no longer separate,” she adds. “The widow often doesn’t realize that now the entire house — even the equity you and your first spouse established — is marital indivisible in this divorce.”

Another not-so-simple example to keep in mind is an investment account. Often, these accounts are set up so that they pay their own taxes. “However, if you elected to pay those taxes with marital income, you may have an issue where the court says, ‘Okay, now that’s not a separate investment account you inherited anymore. Now it is marital,’” explains Lisa. “Once the account is inherited, it would probably be best to pay the taxes out of its capital gains to prevent something like that from happening in your divorce action.”

How can Gill Family Law help protect my inheritance?

Lisa says she is confident in her team’s ability to handle the issues of inheritance and marital assets in divorce, as they deal with them frequently. When a client comes to them for help, the Gill Family Law team will ask all the necessary questions to acquire as much information as possible.

“We look very closely at the facts of how things were handled during the marriage to make sure we can make the strongest legal arguments as to why things should maintain a separate classification,” explains Lisa. “It’s very important to make sure you have a divorce attorney doing detailed, factual analysis on what is happening in your case, making arguments early, and developing a long-term strategy to try to prevail on those arguments.”

Gill Family Law is located at 6750 Poplar Ave., Ste. 820, Germantown, TN 38138. To learn more, visit gillfamlaw.com or call (901) 667-8977.

This article is sponsored by Gill Family Law.