Getting engaged is an exciting life event, but it is also an important time to think carefully about your financial future. For example, if you own a business and have inherited substantial assets, marriage can affect how those assets are managed, used and divided if the relationship later ends.
Also, an inheritance is often treated as separate property. However, that protection is not always automatic. What you do with the money during your marriage may matter as much as where it came from.
Why should I keep my inheritance separate?
Commingling occurs when separate funds mix with marital money. For instance, depositing inherited cash into a joint account and using it for household expenses may make it harder to trace the funds.
You can reduce that risk by keeping the inheritance in an account held solely in your name. Avoid depositing marital earnings into that account. You should also preserve:
- Estate documents
- Account statements
- Property records
- Other materials showing when and how you received the assets
You may choose to use inherited money for your family while keeping it separate. However, before transferring the funds or changing an asset’s title, consider how the decision could affect its separate-property status.
Can using my inheritance to support my business create problems?
Yes. Using inherited money to fund your business may blur the line between separate and marital property. The issue can become more complicated if your spouse later works for the company, contributes money or helps increase its value.
Your business may require its own protection plan, so consider obtaining a professional valuation before marriage. This creates a record of the company’s value before the wedding.
Taking protective measures before marriage can help you preserve assets while creating clear expectations for your future together. A legal professional can help you create a plan that protects your inheritance without treating your marriage like a business transaction.