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The Complications of High Net Worth Divorce & Inherited Wealth

Posted by Tom Holland | Jan 12, 2021 | 0 Comments

The Complications of High Net Worth Divorce & Inherited Wealth
In South Carolina, inheritances are typically immune to equitable division during divorce, and this rule applies regardless of the form of the inherited asset – whether cash, real estate or any other type of property. This also applies whether the spouse received the inheritance before or during the course of the marriage.

However, although this is the general rule of equitable distribution, it does not always play out that way in every circumstance. Often, clients come to us for help in securing their inheritances and gifts during a divorce because their finances became commingled with their spouse's. This is especially true with longtime marriages and high-asset divorces.

For inheritances to remain completely separate property, they should remain segregated from the rest of the family's finances.

What is commingling of assets?

In South Carolina, spouses can invalidate their separate property, even inheritances, by commingling. This means mixing your inherited or gifted property with your spouse's marital property. A common example of this would be if you inherited a good deal of cash from your uncle. If you deposit that check into a joint bank account with your spouse, that money loses its immunity from equitable distribution and becomes marital property.

Or, if one spouse buys a home with an inheritance, the other spouse might be able to claim commingling if joint funds are used to pay other expenses like mortgages, insurance and maintenance.

Keeping an inheritance separate

If your spouse agrees that an inheritance is yours alone, you may sign a premarital or postmarital agreement for a judge to honor in court. However, you should still take action with any type of separate asset to ensure it remains separate, like not using it to pay a home mortgage or marital debts.

To avoid disputes and possible loss of your inheritance, document receipt of any gift or inheritance, along with any relevant details. This can help show that it is your asset in the event of a future disagreement.

When determining whether or not an inheritance is separate or marital property, the court may consider a number of other factors as well. For example, if a long period has passed between the inheritance and divorce, it may be treated as a marital asset. Or, the deceased may have specifically desired the inheritance to benefit the entire family and not just the named spouse. In other cases, a judge may rule a spouse can benefit from the inheritance if he/she provided care taking duties for the deceased.

Every divorce and every circumstance is different, and Attorney Tom Holland provides solid advice on how to protect your assets when you have a lot at stake. Contact Holland Law LLC in Fort Mill or Rock Hill today. We serve clients in York, Lancaster, and Chester Counties. Call today to schedule a consultation: 803-219-2630, or reach out through our contact page.

About the Author

Tom Holland

Experienced Divorce, DUI, and Criminal Defense Attorney While I've been primarily focused on the practice of divorce and family law for the past decade, my experience as a criminal prosecutor has continued to serve my clients well. I previously served as the General Counsel for the Lancaster Cou...


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