Leaving a financial legacy is a final act of love meant to endow family members now and into the future. Yet all too often, people lose precious heirlooms, estates, and money when divorce becomes part of the story. But there are steps you can take to create a safety net ahead of time.
Dividing Assets in a Divorce
In Indiana, everything you and your spouse own typically goes into one pot for the court to divide in the case of divorce. This includes all property, bank accounts, retirement funds, and real estate. Usually, all of your combined assets are then split equally. But, Indiana courts can take into consideration inheritance situations when deciding how to divide marital assets. In some instances, an inheritance can be spared from being split down the middle. Judges look for firm evidence, including factors like this:
- The inheritance was kept strictly in the spouse’s name
- The other spouse did not contribute anything to the accumulation or appreciation of the inheritance
- The gift was purposefully kept separate from the marital assets and didn’t commingle, or combine, in any way
- The inheritance was not treated by the spouses as marital property
Unfortunately, keeping an inheritance entirely separate from marital accounts or property can be difficult. Most people mix inherited funds into their joint assets without even thinking about it. For example, using an inheritance to pay bills, make a down payment on a home, or pay taxes could be seen as commingling the funds.
Safeguard Your Legacy
Protecting your family’s legacy is critical, so it’s important to shelter your assets from vulnerability as much as possible. Just like buying insurance for your life, house, or car, a prenuptial agreement (or postnuptial, if you’re already married) acts as an insurance policy for your assets.
We understand that no one goes into a marriage planning on divorce, but the key is to be prepared in case the unexpected should happen. With a solid agreement in place, the court will follow the inheritance distribution spelled out in the contract instead of just splitting the pot evenly down the middle, if a divorce should happen.
Gift Your Money with Confidence
When you’re in the role of gifting a financial legacy, you want to be sure your inheritance stays safe and secure with your intended loved ones for years to come. Unfortunately, family disputes and divorce can derail even the best of intentions. But the good news is this: there are ways to protect your gift even after you’re gone. Here are some steps you can take today to avoid painful circumstances later:
- Talk honestly and openly with family. Avoid surprises by sharing your intentions early with your spouse (or spouse-to-be) and/or any legacy gift recipients. Avoiding the conversation altogether might feel more comfortable, but this often means trouble down the road.
- Find an appropriate time to bring it up. Emotions can run high during these kinds of financial and end-of-life conversations. It’s best to find a non-stressful time to talk with loved ones. Often holidays and big family gatherings are not the best settings for this type of conversation.
- Find a trusted attorney. Work with an experienced estate planning attorney to determine the best course of action for you. They can guide you through options, like trusts and other arrangements. And they can even advise on how to handle sensitive family discussions best.
Whether you’re trying to protect inheritance you’ve received, or plan on leaving your financial legacy, it’s essential to secure your funds now for future generations. If this is an area where you could benefit from solid legal guidance, please reach out to Cecelia Neihouser Harper at 765-637-9175 or [email protected] to get the conversation started.
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.