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Protecting inheritance in divorce needs planning upon receipt

Divorcing spouses in California may be interested to learn that trying to protect an inheritance at the time the divorce is considered may be too late. How the inheritance was handled at the time it was received may play an important role in asset division in a community property state such as California. While it is difficult to consider a divorce on the eve of the marriage, anticipating future inheritances or valuable gifts and their protection in advance may avoid litigation in the future.

While a prenuptial agreement is an effective way to protect the assets of each spouse, such as inherited money, rare art property or businesses, it may not always hold up in court. However, if no timely action is taken to claim an asset, it may be regarded as community property. You may be able to keep it, but your spouse will get community property of the same value in exchange. While many couples use a prenuptial or post-nuptial agreement to specify that each spouse will relinquish rights to inheritances or gifts received by the other spouse, it may be challenged, and additional steps may be appropriate.

Saving any documentation showing that the gift or inheritance was meant for you alone may be a good idea. Obtaining a letter where the donor states whom the gift was intended for, or even a gift tax certificate from the donor, may be useful. The way an inheritance is used may make it community property. Keeping such assets separate by putting them in a separate bank account, or in your name only, may avoid them becoming marital property.

Asset division when inheritances and gifts are involved in a California divorce may prove to be complicated, and obtaining the services of an experienced divorce attorney to draft a premarital agreement that will hold up in court may protect your assets. Even if you have not received an inheritance or major gift yet, it may be wise to cover such eventualities in anticipation. Those seeking more information on prenuptial agreements may find answers on our divorce website.

Source: The Wall Street Journal, "How to Keep Your Inheritance in a Divorce", Neil Parmar, Nov. 9, 2014

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Victoria S. Linder Law Office
5303 Folsom Boulevard
Sacramento, CA 95819

Phone: 916-905-4805
Fax: 916-498-0127
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