It is known that high net worth divorces are usually very complex, and the assistance of specialized lawyers and financial advisors is of utmost importance to navigate the process with more ease.
However, if one spouse has inherited wealth, the divorce becomes even more challenging for professionals to handle, as they have to untangle the situation of both partners.
As a financial term describing the assets passed down to a person after someone close dies, inherited wealth often comes in the form of money in a bank account.
Still, it can also refer to:
- real estate
- other tangible assets
Interestingly, inherited wealth can be emotionally triggering during a divorce, whether it is a regular one or a high net worth one. Because inherited wealth might be emotionally triggering to the spouse to whom it belongs, they might feel a sense of conflict between their family of origin, if the wealth stems from there, and the partner they are divorcing.
More specifically, the wealthy spouse can feel that it is their duty to protect the money for future generations, which will inevitably outweigh their wish regarding the fair division of assets. As for the spouse who married the high net worth individual with inherited wealth, they might also have some sense of entitlement after having started a family, especially if they have sacrificed their career to raise children.
Nevertheless, while the spouse who married into the money might have been part of the family for decades when it comes to 8 to 10 people behind the inherited wealth and not just the couple, the family of origin will usually prevail for the high net worth person.
How Is Inherited Wealth Treated During a High Net Worth Divorce?
During a high net divorce, the same rule for regular divorces applies to marital property - it will be divided between the separating partners. Marital property refers to the assets that were acquired during a marriage. When it comes to inherited wealth, it is rarely the subject of asset division, as it is not considered marital property. Instead, it is treated as separate property belonging to the person who received it.
Nonetheless, if the inherited property is shared between spouses, it will be treated differently based on the effective rules in the state of the couple's residence. For example, if the money is deposited into a joint bank account and used for joint marital expenses, known as the commingling of the inheritance, the inheritance might no longer be seen as separate property. Likewise, if the inherited wealth is used to improve the residence of the spouses, it can also lose its separate status.
If you are a high net worth individual who seeks to protect their inherited wealth in the event of a divorce, you should take the following measures:
- keep your bank account separate from your spouse's if your inherited wealth concerns money
- identify your assets and determine what belongs to you with the help of a professional
- get copies of all your financial statements
- set up a bank account just in your name and move a certain amount of money there if you commingled the inherited wealth
- familiarize yourself with your state's law regarding the division of inherited wealth
Therefore, unless you commingle your inherited wealth with your spouse's assets, it will nearly always be completely safe in a divorce, as the law considers it separate property and not marital property.
Lastly, to make sure you will not make a mistake that could compromise the status of your inherited wealth, we strongly recommend you work closely with a specialized lawyer, as well as with a financial advisor if you are a high net worth individual going through a divorce. The sooner you hire these professionals, the better, as they will have the time they need to go through your documents and put everything in order so that your divorce will go as smoothly as possible.
Having a competent lawyer by your side while you are navigating a challenging high net worth divorce is paramount, as it will ease the burden of your divorce to a great extent. Our law firm offers superior legal assistance, and if you have any questions, we invite you to give our legal team a call.
Our Lawyer Specializes in High Net Divorce Cases and He Will Ease the Burden of Your Divorce
With over 20 years of experience, Sean M. Cleary specializes in high net worth divorce cases. He assists and represents clients all over the country.
If you are facing a rough and complicated high net worth divorce, you should contact The Law Offices of Sean M. Cleary, as he will be able to put his knowledge, experience, and resources to use and help you address the most difficult aspects of your divorce.
Sean M. Cleary will make sure you will not have to deal with the aspects of your divorce that can be taken care of by him, which will allow you to focus on more urgent and important matters in the meantime.