When you get married, you want to share everything with your spouse; your hopes and dreams; your ups and downs; your days and your possessions. And your finances are no different – after all, you’re starting a household and maybe a family, it only makes sense to combine your bills and your income, including savings and investments.
Inheritance as a marital asset
What about inheritances though? For many people, an inheritance can be the largest sum of money (or valuable property/real estate, etc.) they ever receive at one time, so what to do with inherited assets can be a big question, and there are pros and cons to either choice. If you’re married, inheritances can be held jointly or kept separately by the individual named in the will.
Pros and cons
The main advantage of holding it jointly is that if something happens to you, you know that the assets will automatically transfer to your spouse and that they will be better taken care of as a result. Another benefit of holding it jointly is that the funds or property can be more easily used by either party. But there are also advantages to keep an inheritance separate:
- Should the union end in divorce rather than in the death of you or your spouse, separately held inheritances usually are not obligatorily split between the separated parties like marital assets are;
- A separately held inheritance then becomes part of your estate if you should pass, and can therefore be allocated however you like – if you decide that it should all go to your spouse then it can;
- If you would rather see it go into trusts for your children’s education, you can do that also; you could even allocate it back into your birth family if you had a sibling you wanted to see taken care of with money you inherited from your parents.
- You retain control if the asset is held jointly then it automatically goes to your spouse and may even end up going to their future spouse or children of a future marriage rather than staying in your family.
No matter what reason you have for holding an inheritance separate from your spouse or keeping it jointly, you should be prepared to be open with your partner about your decision. Even if you don’t share everything with your spouse, a marriage is still dependent on a foundation of trust and communication, and you should have a frank discussion with your partner about the decision you’re making and the reasons behind it.