Protecting Inherited Wealth During Maryland Divorce

When you are facing a high-asset divorce in Maryland, one of the most pressing concerns may be how to protect your inherited wealth. Maryland divorce law treats inherited assets differently than marital property, but there are critical factors to consider to ensure those assets remain protected. Our team, with a deep understanding of the financial complexities involved in high-asset divorces, is well-equipped to handle your case, especially when inheritance is involved. As divorce attorneys with extensive experience in handling complex financial situations, we work diligently to help our clients preserve what’s most important to them, including wealth acquired through inheritance.

Inherited assets can be one of the most significant components of wealth in a marriage. However, Maryland law provides specific guidance on how these assets should be handled in a divorce. The key is understanding how your inheritance may be classified as either marital or non-marital property and how to prevent any unintentional commingling that might jeopardize your rights to those assets. By taking proactive steps, you can protect the wealth you’ve inherited and minimize the impact of a divorce on your financial future.

Marital Vs. Non-Marital Property In Maryland

Maryland courts follow the principle of “equitable distribution” when it comes to dividing assets in a divorce. This means that the division of property should be fair, though not necessarily equal. One of the key distinctions in Maryland divorce law is between marital property and non-marital property. Inherited assets, if handled correctly, fall under the category of non-marital property.

Under Maryland Family Law § 8-201(e), non-marital property is defined as property acquired before the marriage, property that is directly traceable to non-marital sources, and property that has been explicitly excluded through a prenuptial or postnuptial agreement. Importantly, inheritance received by one spouse is considered non-marital property. However, this protection is not automatic, and there are several situations where inherited wealth can be classified as marital property, subject to division.

Avoiding Commingling Of Assets

One of the most common mistakes we see clients make is commingling their inherited wealth with marital assets. For example, if you deposit inherited funds into a joint bank account or use them to purchase jointly-titled property, those assets can lose their non-marital status. In such cases, the court may treat the inheritance as marital property and divide it as part of the divorce settlement.

To protect your inherited wealth, it’s essential to keep these assets separate from marital funds. This could mean maintaining a separate bank account for the inherited funds or ensuring that any property purchased with inherited money is titled solely in your name. By keeping detailed records and clearly documenting the origin of the funds, you can preserve your claim to this property.

The Role Of Prenuptial And Postnuptial Agreements

Prenuptial and postnuptial agreements are effective tools for protecting inherited wealth in the event of a divorce. These agreements can explicitly state that any inheritance received during the marriage will remain non-marital property, even if the assets are used for marital purposes. Without such agreements in place, you may face challenges proving that certain assets are indeed non-marital.

If you have significant inherited wealth or expect to receive an inheritance, it’s wise to consider a prenuptial agreement before getting married. For those who are already married, a postnuptial agreement can still offer similar protections. These agreements must be carefully drafted and meet all legal requirements in Maryland to be enforceable.

Valuing Inherited Assets

Another crucial issue in high-asset divorces is determining the accurate value of inherited assets. Maryland courts rely on a fair valuation of both marital and non-marital property to make decisions about property division. If you’ve inherited real estate, investment portfolios, or business interests, proper valuation is critical to ensure your rights are protected. This process involves assessing the current market value of the assets, considering any potential future earnings, and accounting for any increase in value during the marriage.

At Shah & Kishore, we understand the complexities involved in valuing high-net-worth assets. Attorney Kishore’s Bachelor’s Degree in Economics/Finance and an MBA, combined with his experience as a real estate investor, gives Mr. Kishore the ability to assist in assets accurately. Whether it’s determining the value of a family business or assessing investment portfolios, we ensure our clients receive fair treatment in property division.

Protecting Small Businesses And Other Complex Assets

For those who have inherited a business or have used inherited funds to invest in a business, special considerations apply. Maryland law allows for a business to be classified as non-marital property if it was inherited, but any increase in the value of that business during the marriage can complicate the division. The key is to establish a clear distinction between what portion of the business is considered marital and what remains non-marital.

If you own a business, we work closely with financial experts to ensure that any increase in the value of your business is properly accounted for. These experts can provide a professional valuation of your business, taking into account factors such as market trends, potential future earnings, and the specific circumstances of your business. By doing so, we can help prevent your spouse from claiming a disproportionate share of the business or its increased value.

Maryland Marital Property FAQs

How Does Maryland Define Marital And Non-Marital Property?

In Maryland, marital property includes assets acquired during the marriage, regardless of whose name is on the title. Non-marital property includes assets acquired before the marriage or obtained through inheritance or gift. Under Maryland Family Law § 8-201(e), inherited assets are considered non-marital, provided they are not commingled with marital property. The distinction is critical because only marital property is subject to division in a divorce. If inherited assets are kept separate, they will likely be excluded from the property division process.

What Happens If I Commingle My Inherited Assets With Marital Property?

Commingling occurs when you combine non-marital assets, such as inheritance, with marital property. For example, depositing inherited funds into a joint account or using them for a down payment on a jointly-owned house can turn that inheritance into marital property. If you commingle assets, it becomes more challenging to prove that those assets are non-marital, and the court may treat them as part of the marital estate during the divorce.

Can I Protect My Inheritance With A Prenuptial Or Postnuptial Agreement?

Yes. A prenuptial agreement can clearly state that any inheritance received by one spouse during the marriage remains non-marital property, even if it is used for marital purposes. Postnuptial agreements can serve the same function if drafted after the marriage. These agreements must comply with Maryland law to be enforceable, and they can be invaluable in protecting inherited assets during a divorce.

How Can I Ensure An Accurate Valuation Of Inherited Assets In A Divorce?

Accurately valuing inherited assets is crucial, especially for high-net-worth individuals. Courts require a fair market valuation of both marital and non-marital property. Inherited assets like real estate, investment portfolios, or businesses, we work with financial experts to provide an accurate assessment. Mr. Kishore’s Bachelor’s Degree in Economics/Finance and an MBA allow him to provide guidance on the nuances of asset valuation, particularly when it involves complex investments or business interests.

What If My Inherited Assets Increase In Value During The Marriage?

If your inherited assets increase in value during the marriage, the appreciation may be subject to division, especially if your spouse contributed to the increase. Maryland courts will look at whether the increase in value was due to efforts by either spouse. For instance, if you inherited a business that grew substantially during your marriage, the court might classify the growth as marital property while keeping the original value of the inheritance as non-marital. Proper record-keeping and documentation can help protect the original value of your inheritance.

Protecting Your Inherited Wealth

Divorce can have a significant impact on your financial future, but it doesn’t have to jeopardize your inherited wealth. By taking proactive steps, such as keeping assets separate, using prenuptial or postnuptial agreements, and ensuring proper asset valuation, you can protect the financial legacy that was entrusted to you.

At Shah & Kishore, we work with clients to develop comprehensive strategies for protecting their most important assets. With Mr. Kishore’s unique financial background—holding a Bachelor’s Degree in Economics/Finance, an MBA, and extensive experience in real estate investment—he can offer unparalleled insight into preserving wealth during a high-asset divorce.

Contact Our High-Asset Divorce Attorney In Rockville For Exceptional Representation

At Shah & Kishore, we have the experience and financial insight needed to protect your inherited wealth during a high-asset divorce. Attorney Kishore’s Bachelor’s Degree in Economics/Finance, and an MBA, allow him to approach each case with a deep understanding of asset valuation and protection. If you are concerned about preserving your inheritance or other important assets during a divorce, contact our High-asset divorce attorney in Rockville at Shah & Kishore by calling (301) 315-0001 to receive your free consultation. We serve clients throughout Montgomery County, Maryland, and are committed to safeguarding your financial future.