Inheritance And Divorce: Legal Considerations For Protecting Inherited Assets

Inheriting assets can be a momentous occasion, but when marital challenges arise, the issue of protecting those inherited assets becomes tricky. You need to employ proactive legal measures to ensure your inherited assets don’t get assessed as marital property. A dependable divorce attorney can provide you with strong legal representation and help you take the right steps to ensure your inherited assets remain separate.

An Overview of the Property Division Laws in Virginia

Separate Property (Code § 20-107.3)

Virginia follows equitable distribution, where marital property is divided fairly, but not necessarily equally. Assets acquired before marriage or received through inheritance are typically considered separate property and may be excluded from the marital estate subject to division.

Documenting Inherited Assets (Code § 20-107.3(A)(3)(e))

Clear documentation is vital. Virginia acknowledges separate property, which includes inherited assets. Keeping records of inheritance documents, wills, or trust agreements is important to asserting their separate status during divorce proceedings.

Commingling of Assets

Commingling of assets refers to the mixing of separate and marital property, which can complicate the division of assets during a divorce. Commingling can sometimes lead to the transmutation of property, where separate property becomes marital property due to the actions or intentions of the parties involved.

Legal Tools for Protecting Inherited Assets in Virginia

Prenuptial and Postnuptial Agreements

Virginia recognizes marital agreements, including prenuptial and postnuptial agreements, which can define the treatment of inherited assets. Code § 20-147 allows spouses to contract with each other regarding their property rights, providing a legal framework for asset protection.

Trusts and Inheritance Planning in Virginia

Virginia allows the creation of trusts to protect inherited assets. Establishing a trust, in accordance with Virginia’s Uniform Trust Code (Code § 64.2-7), allows you to specify how assets should be distributed, providing a level of control even in the event of divorce.

Divorce Proceedings and Inherited Assets

• Full Financial Disclosure: Virginia mandates full financial disclosure during divorce proceedings (Code § 20-108.1). Accurate disclosure of inherited assets, including their documentation and value, is vital to maintain transparency throughout the legal process.
• Equitable Distribution vs. Community Property: Understanding Virginia’s approach to equitable distribution is essential. Code § 20-107.3 guides the court in determining a fair distribution of marital property, considering factors such as the nature and value of each spouse’s property, including inherited assets.
• Legal Representation: You should engage a family law attorney with experience in Virginia’s divorce laws. Familiarity with the state’s statutes, such as Code § 20-107.3, enables your attorney to tackle the legal challenges, protect your rights, and advocate for the preservation of your inherited wealth.
• Mediation and Negotiation: Virginia encourages alternative dispute resolution methods, including mediation or negotiation. These approaches provide flexibility in crafting solutions that align with Virginia’s legal framework, considering the unique aspects of your case, including the treatment of inherited assets.

Tips to Protect Your Inherited Assets from Transmutation 

Transmutation of property refers to the process by which separate property, such as inherited assets, can be transformed into marital property. This transformation may occur through various actions or intentions of the spouses during the marriage.

• Keep thorough and clear documentation of the inherited assets. This includes wills, trust agreements, and any other relevant paperwork.
• Keep inherited funds in a separate account in your name and refrain from using them for joint expenses without proper documentation.
• Avoid transferring the title to joint ownership unless absolutely necessary and done with a clear understanding of the implications.
• Refuse to combine inherited funds or property with joint assets without proper documentation.
• Designate specific accounts for inherited funds and ensure that any income generated from these assets is kept separate.

Virginia law recognizes marital agreements (Code § 20-147) and having a legally enforceable agreement can provide clarity and prevent unintended transmutation. A knowledgeable divorce attorney can provide advice on strategies to protect inherited assets, offer insights into the potential risks of transmutation, and help you through the legal complexities of divorce.

How will a Lawyer Help Protect Your Inherited Assets During a Divorce?

An experienced family law attorney can play a significant role in protecting your inherited assets during a divorce. They will conduct a thorough legal analysis of your case, assessing the status of your inheritance under Virginia’s equitable distribution laws. In addition, your lawyer will review all relevant documents related to your inherited assets, including wills, trust agreements, and any other documentation. This ensures a clear understanding of the origin, nature, and intended treatment of the assets.

If you have not already entered into a prenuptial or postnuptial agreement, your attorney can assist in drafting a legally enforceable agreement that addresses the treatment of your assets in the event of divorce. This proactive step can provide a clear framework for asset protection. They will engage in negotiations with the opposing party’s legal representative to reach a mutually agreeable settlement. This can save you from costly litigation.

Based on this, in case there are irreconcilable differences and your divorce proceeds to court, your attorney will represent you during litigation. They will present a compelling case, using legal arguments and evidence to support the separate status of your inherited assets and advocating for fair distribution.

Discuss a Winning Legal Strategy with our Family Law Attorneys to Protect Your Assets During a Divorce

The experienced divorce lawyers at the Pack Law Group can provide personalized strategic planning designed to shield your inherited assets. We strive to facilitate discussions to find mutually agreeable solutions, fostering a more collaborative and less adversarial approach to resolving issues related to asset division. In court, we present a compelling case, utilizing legal arguments and evidence to obtain a fair distribution. Schedule your free and confidential consultation with us today. Call 540-586-7225 or write to us online.