Pay Dirt is Slate’s money advice column. Have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
Since the recent death of my mother, I’ve been wondering if I should keep my inheritance separate property or commingle it with the joint accounts I share with my husband.
We have no debt, own real estate, and have cash/stocks/401(k)s that total to around $1.25 million. My inheritance is about $100,000 from my mom, but the bulk of her estate is in a trust that I will receive after the death of my father. My share of that will be about $1 million. Mom believed strongly that I should keep it separate property if that makes any difference. Should I even let my husband know of the inheritance if I won’t be commingling?
—Missing My Mom
Dear Missing My Mom,
I’m sorry for your loss. You should follow your mother’s wishes and keep your inheritance separate from marital assets—don’t put it into a joint account or even use it to maintain shared property. Your mother may have been explicit about keeping it separate property because she understands the power of having your own money in a marriage. This is especially true if you are a heterosexual couple. Remember, it wasn’t that long ago that married women weren’t allowed to have their own bank accounts. Even though we’ve come a long way with gender equality, some statistics show that women’s household income fell by 41 percent following a divorce after age 50, while men’s fell by only 23 percent. Other researchers have found that the poverty rate for separated women was 27 percent, nearly three times that for divorced men.
Keeping the money separate is a form of insurance for you. Relationships (and people) change and inheritances are treated differently under divorce law in most states as long as it is not commingled. For example, if you put your inheritance into a joint bank account, it may be considered a shared asset and divided equally in case of a divorce. In addition to protecting your assets in the case of a divorce, it may also help to protect the money from your husband’s creditors. I would speak privately with an attorney licensed in your state, so you understand how to keep the money separate in the eyes of the law.
As for telling your husband, I would mention that you’re inheriting some money and that your mother wanted you to keep it as a separate nest egg. No need to provide exact numbers. I would only discuss the million dollars in the trust once your father passes—there’s no reason to bring up money that isn’t yours yet (and depending on the type of trust, you may never see the money if your father needs it for living expenses).
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