Inheritances and trusts are passed down within families and are usually intended to be kept intact, to provide for the next generation. However, when a spouse enters into a family, they may come to consider some of those inherited assets as their own. A Kansas City family law attorney with Joseph, Hollander & Craft can assist you with protecting your own separate property as well as pursuing a fair conclusion to the proceedings.
Key Takeaways
- Inheritances and trusts are generally treated as separate property in Kansas and Missouri divorces, but they can lose that protection if they become commingled with marital assets or are used for shared expenses.
- Inherited wealth can unintentionally become marital property through actions like depositing inherited funds into joint accounts, using inheritance money to buy shared assets, or involving a spouse in managing inherited property or a family business.
- Trust structures and asset tracing play a major role in high-asset divorce cases, especially when business interests, family property, or trust distributions are involved, making early legal guidance critical to protecting inherited wealth.
Are Inheritances Protected in a Kansas City Divorce?
One main area of contention during a divorce is equitable division of assets. Family law courts are concerned with how to account for the contributions that both spouses have made over the course of the marriage. All marital property will be divided in the divorce.
Separate property, however, is not included in a divorce settlement–although it may still be taken into consideration when deciding alimony and child support matters. Inheritances are generally considered to be separate property under Missouri and Kansas state law, regardless of when the inheritance takes place, either before or after the marriage. Under Missouri Revised Statutes § 452.330, property acquired by “gift, bequest, devise, or descent” is presumed to be separate.
However, courts can evaluate how the inheritance was treated during the marriage. At times, your actions during the course of the relationship can convert a separate inheritance into shared marital property.
How Inherited Assets Can Become Marital Property
There are several ways by which an inherited asset can come to be considered marital property by a family law court in Kansas City. They include:
Commingling Inherited Funds
If you deposit inherited funds into a shared account, then a judge may consider that action to be commingling. In this case, a separate inheritance can be converted into marital property. Another example might be using an inheritance to pay down shared debt.
Using Inherited Funds to Purchase Shared Assets
When an inheritance is used to purchase a shared vehicle or a marital home it may be considered commingled. If the shared asset has a deed in both of the spouses’ names, it will likely be considered to be marital property. Likewise, if you used your inheritance to invest in shared securities or other financial products, the interest accrued may be considered marital property.
Using Inheritance for Marital Expenses
If one spouse used their inheritance to make improvements to the marital home or to a shared vacation house, the inheritance may no longer be considered separate property.
Significant Improvements or Labor Done During a Marriage to an Inherited Asset
If a spouse has contributed significantly to a property during the course of a marriage and the asset has grown in value due to their efforts, this added value may be considered marital property.
Say one spouse inherits a property before or after the marriage, but the two spouses run it together as a rental property. If the other spouse was in charge of repairs, maintenance, and bookings for the property, then the updated value of the rental may be considered marital property, even though the initial asset was inherited.
Inherited Real Estate and Family Property in Divorce
Inherited real estate does not always stay separate property, depending on how it was used during a marriage. An inherited house that becomes a second home or a shared business, for instance, may be converted into marital property. Likewise, when one spouse joins a family business, there may be complications if the spouse worked for the business or invested their own money into the enterprise.
Inheriting Shares or Ownership in a Family Business
If one spouse has inherited partial ownership or a controlling interest in a closely held family business, the other may try to claim that the family company is a shared asset. In fact, business valuation issues in divorce occur more often than you might think. Whether the ownership interest remains separate property is often decided by a family law judge who is persuaded by one spouse’s divorce attorney. For instance, how business income or dividends were treated during the marriage may inform what is considered marital property during a divorce. Examples include if shares in a family company were used to support the other spouse’s lifestyle, or if one spouse advised the other about business decisions. There may also be buyout concerns if the ownership becomes disputed. This can affect who controls your legacy, your employees’ well-being, as well as your family members’ future livelihoods after a divorce.
How Trusts Are Treated in a Kansas City Divorce
The difference between trust ownership and trust beneficiary interests is often based on how the trust was established as well as who funded it. A revocable or living trust may have been created by either of the spouses during the course of the marriage. In this case, assets put into the trust, whether designated for the spouses’ use or for future children, may still be considered marital property.
By contrast, an irrevocable trust is more protected during a Kansas City divorce. If a parent or grandparent established an irrevocable trust for an inheritance and funded it on behalf of one spouse, then those assets are more likely to be considered fully separate property. In this case, the inheritance will not be subject to division at the dissolution of a marriage.
Some trust provisions may limit access to assets during a divorce. If a discretionary trust is ruled to have been created solely to shield assets from a spouse, then the court may consider that amount during the course of equitably dividing property. A family law judge may rule that the assets within a trust be included for division if it appears that the trust was created in preparation for the divorce or with intent to shield assets from division in a divorce.
When Trust Distributions May Become Marital Property
If distributions from a trust were not kept in a separate account or were used for shared expenses, like car payments, private school tuition, health care, vacations, or a wedding, then the trust may be jeopardized as separate property.
Asset Tracing in High-Asset Kansas City Divorce Cases
Asset tracing has only become more complicated in recent years with the rise of cryptocurrencies and other shielded assets. Asset tracing is crucial to create a comprehensive financial picture. In some cases involving especially high asset divorces, you may need the assistance of forensic accounting and professional appraisers.
How a Kansas City Divorce Attorney Protects Your Inherited Wealth and Assets
A family law attorney in Kansas City can protect inherited wealth with a premarital agreement prepared well in advance of a contentious divorce. In the event that there is a dispute over a prenuptial or postnuptial agreement, a divorce attorney in Kansas City can advise you about how best to proceed to protect your assets. Negotiations through a skilled and professional family law attorney can depersonalize the proceedings and assist you both to come to a satisfactory conclusion.
When to Speak With a Kansas City Divorce Lawyer About Inherited Assets
Disputes over inherited assets can quickly become complex during a divorce, particularly when questions arise about commingling, trust structures, or business interests. In many Kansas City divorce cases, these issues are not always obvious at the outset of the divorce process, which is why it is important to involve a divorce lawyer early.
You should consider speaking with a Kansas City divorce lawyer if:
- Asset classification is unclear: One spouse claims inherited assets should be included in property division.
- Commingling may have occurred: Inherited funds were deposited into joint accounts or used for shared expenses.
- Trusts are being questioned: A trust’s structure or distributions may be scrutinized in divorce proceedings.
- Business interests are involved: Inherited ownership in a family business raises valuation or control issues.
- Documentation is incomplete: Financial records may be needed to trace inherited assets and protect your legal rights.
A knowledgeable attorney can evaluate how inherited funds were used, whether assets were commingled, and how courts may approach these issues in a Kansas City divorce. An attorney can also work with financial professionals to ensure assets are properly traced and classified.
Working with an experienced Kansas City divorce attorney and a trusted law firm allows you to develop practical, strategic solutions to protect inherited wealth. Whether through negotiation or litigation, your attorney can help you navigate the divorce process with a focus on preserving assets and reaching a fair outcome.
Speak With a Kansas City Divorce Lawyer About Your Assets
If you have questions about protecting your inherited assets, contact a Kansas City divorce attorney with Joseph, Hollander & Craft today. Our team has experience protecting inheritances and trusts during Kansas City divorces, as well as the know-how to account for a full financial picture during the process. We maintain offices in Kansas City, Lawrence, Overland Park, Topeka, and Wichita for your convenience.
Carrie E. Parker is a criminal defense and civil litigation attorney located in Lawrence, KS. Ms. Parker represents individuals and businesses during the investigation and prosecution of criminal charges in federal and state courts. She also represents businesses and individuals in complex civil litigation and property holders seeking the return of assets seized for forfeiture. […]
