Expecting an Inheritance? Already Got One? Get Advice!

Image courtesy of Ambro / freedigitalphotos.net

By Kimberly Napolitano

One of the greatest aspirations of parents is to leave an inheritance for their children.  Whether you receive your inheritance from a parent, grandparent, extended family or a friend, you need to be very careful what you do next.  It may be hard to focus as you grieve, but you need to take this seriously.

The single largest issue that arises if you are married or later marry.

That probably means it matters to most of us.  If you are married, you need to proceed directly to an attorney, do not pass go (you will certainly recoup the $200 and the consultation fee).  Schedule a consultation and determine your separate property rights to your inheritance.  Ideally, you should seek an attorney’s advice before you even deposit your inheritance check or take title to assets you inherit.  It is that important.

If you inherit cash or assets while unmarried, you need to seek advice from an attorney before you get married.  We have written before about the importance of a prenuptial agreement, but for you, this is nearly a must.

Why, you ask, do I need an attorney?

It’s simple: to keep the money protected as your own.  After all, it is your inheritance, isn’t it?  Let’s face it, the statistics for successful marriages are dismal and the reality is that if, for example, you put your inheritance check in your joint checking account (almost a given if it’s the only account you and your spouse have), you have likely under the law just “gifted” half of your inheritance to your spouse.  Even if it seems fine now, it will just short of guarantee that neither you nor your survivors will think it is fine in the dreaded event of death or divorce.

But what if we want to spend the inheritance?

By all means, you should spend your inheritance the way you see fit, which can include benefiting your spouse.  Go ahead, put a new roof on the house, install the new appliances, and go on the cruise you had only dreamed of.  An attorney experienced in these issues can advise you how to document loans from your separate assets to the community so that in the dreaded case of death or divorce, you can be paid back for the money you loaned.  And if it all works out that you live “happily ever after” you can consider forgiving the loans – just beware, these kind of endings may only happen in fairytales.

What should I tell my spouse about my inheritance?

Try this:  I’ve received an inheritance and I’m going to keep it as my separate property in my separate account.  I’m not going to mix it with our community funds unless we sign documents that make it clear that I’m making a loan to both of us.  I want to make sure that I use the money as it was intended and I hope you’ll understand.  If and when you receive an inheritance, I’d expect for you to do the same.

Last word

If there were one piece of advice we could give clients who have been trapped by this situation of depositing or giving part or all of their inheritance to their spouse, it is this:  KEEP RECORDS.  In the event of death or divorce, one or both of you will be trying to prove if the money you inherited belongs to you or to both of you.  Don’t be short on ways to prove it.  Getting the advice of an experienced attorney at the time you receive your inheritance will be worth every dime.

Kimberly Napolitano, concentrates on the representation of individuals and families in all aspects of estate planning, business succession, asset protection, and the reduction of tax burdens. To learn more about Kimberly or for further questions visit our website laxlawyers.com.

Always consult an attorney in your area.
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