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Protecting inheritance from division in divorce

In our last post, we began speaking about property division in divorce, specifically when separate property may be subject to division in divorce. Here we want to focus the discussion on property obtained by inheritance and how to protect this property from division in divorce.

Generally speaking, inherited property is considered to be separate property, but as we’ve shown, that doesn’t mean it cannot be subject to division in a Michigan divorce. This is why it is important to explore options for protecting inheritances from division. Here we’ll look at several possible strategies. 

One possibility, for those who have inherited property, is to retain documentation that the gift was intended to go to only the party who received it. This can include things like the gift-tax return for the property, which allows the donor to say exactly who the intended beneficiary is, as well as letters from the donor specifying their intent with the gift, and any other available documentation demonstrating the exclusivity of the gift.  

Parties who want to keep inherited property separate in divorce may also want to consider keeping the inherited property in a separate bank or investment account, or putting the property in a trust. The latter strategy would come with costs, but those costs may be worth it if it means protecting property in divorce.

Another way to handle the problem is to address it in a prenuptial agreement. Prenuptial agreements, as we’ve previously mentioned on this blog, can be an effective way to set the financial terms of divorce by negotiating those terms in advance.

In our next post, we’ll pick up on this topic of how a prenuptial agreement can be used to protect inherited property from division in divorce

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Protecting inheritance from division in divorce | Peter A D'Angelo, Attorney at Law, PLC