Divorce proceedings are notorious for their emotional toll and complex financial matters. Among these concerns, the division of inherited assets becomes a critical issue for individuals going through a divorce in Ohio. To navigate this challenging process effectively, it is crucial to understand the dynamics of inheritance and its treatment under Ohio divorce laws.
How Does Inheritance Work During Divorce in Ohio?
In Ohio, the division of assets is governed by equitable distribution principles, which prioritize fairness rather than strict equality. Importantly, inheritances are generally regarded as separate property, distinct from marital property. Nonetheless, it is essential to acknowledge that certain circumstances can lead to the classification of separate property as marital property.
What Can Make Inherited Property Marital?
In Ohio, inherited property can be assimilated into marital property if it becomes commingled with assets shared by both spouses or if it is utilized for the benefit of the couple’s household. For example, if one spouse inherits a rental property and uses the rental income to cover the mortgage, utilities, and other household expenses, the property’s status could potentially shift to marital property. Additionally, depositing inherited funds into a joint bank account alongside marital funds might also result in the reclassification of the inheritance as marital property.
What is a Qualified Domestic Relations Order (QDRO)?
In the context of divorces involving retirement plans, a Qualified Domestic Relations Order (QDRO) takes center stage. A QDRO is a court order that enables the division of specific retirement plans, such as 401(k)s, IRAs, and pensions. If a spouse inherits a retirement account during the marriage and contributes to it while married, the account may be considered marital property. By utilizing a QDRO, individuals can divide these retirement plans without incurring penalties or tax liabilities.
How to Keep Inherited Property Secure During an Ohio Divorce?
If you receive an inheritance while married and wish to safeguard it during a divorce, certain steps can help ensure its separation from marital property.
Keep the Inheritance Apart
When inheriting cash, stocks, or other assets, it is crucial to maintain separate accounts exclusively for these assets. By distinguishing them from shared accounts, individuals can establish a clear demarcation, providing evidence that the inheritance has not been commingled with marital property.
Create a Trust
Setting up a trust serves as an effective method for protecting inherited property. Through a trust, individuals can maintain the separation of assets and maintain control over how the funds are utilized. Unless the trust is explicitly used to benefit joint property owned by both spouses, the inherited assets will remain distinct, thereby avoiding the complexities of division during divorce proceedings.
Sign a Prenuptial or Postnuptial Agreement
To solidify the protection of inherited property, individuals can consider signing prenuptial or postnuptial agreements. These legal agreements offer the opportunity to specify the division of assets in the event of a divorce. Inheritance can be explicitly designated as separate property under these agreements, ensuring that it remains with the spouse who is the intended beneficiary.
Conclusion
The division of assets during a divorce is already a challenging endeavor, and inherited property can further complicate matters. Nonetheless, it is comforting to know that Ohio laws recognize inherited property as separate. By avoiding commingling with marital property and taking proactive measures such as establishing trusts or signing prenuptial/postnuptial agreements, individuals can safeguard their inheritance. For comprehensive guidance tailored to your unique circumstances, it is advisable to seek the counsel of a qualified attorney who specializes in divorce and matrimonial law. Protecting your interests and inheritance begins with obtaining informed legal advice.