When going through divorce, the division of assets often ends up being a top concern for many people. This is especially true for people with a lot to lose, or a lot to gain or keep.
For example, if you gained an inheritance during your marriage, where does the divorce leave it?
Community versus separate property
The Business Professor discusses community versus separate properties. What are they? Community properties are the assets that you and your partner own together. These are the properties that are up for division in divorce. On the other hand, separate properties are the properties you own, and these are the assets that you do not have to divide.
Typically, the assets that come from inheritance slot into separate property. This category also includes things you owned before the marriage, gifts that others gave you, and income streams not shared in any way by your spouse.
Keeping your separate property separate
However, there are some instances where separate property may become community property. For example, if you used your inheritance to pay for something that you and your spouse both chipped in for, like a house, then it becomes community property.
Likewise, if you stored your inheritance money in a joint bank account, it becomes joint property. Thus, it is important to know how to keep your separate property separate, and do so through the duration of your marriage.
Understanding how property works from the start of the marriage can help you avoid some serious issues if you do end up wanting a divorce later down the line.