When you inherit assets—whether cash, real estate, or family heirlooms—you expect those assets to remain yours alone. However, Illinois follows an equitable distribution model under the Illinois Marriage and Dissolution of Marriage Act (IMDMA), 750 ILCS 5/503, which can place inherited assets at risk if they become commingled with marital property. We understand how important it is for you to preserve what was passed down to you, and we guide our clients in taking proactive steps to protect their inheritance. From the moment you receive an inheritance, every financial decision can impact whether those assets stay separate or become marital property subject to division.
Inherited assets are generally classified as separate property under 750 ILCS 5/503(a), which means they are not subject to division if you and your spouse divorce. But that protection only holds if you keep your inheritance separate from marital finances. If you deposit inherited funds into a joint account or commingle the funds with marital property, those assets risk being reclassified. Through careful planning and documentation, we help you maintain the separate nature of your inheritance and avoid unintended loss through divorce proceedings.
Understanding Separate Versus Marital Property
Under Illinois law, separate non-marital property includes assets acquired by gift or inheritance before or during marriage, as long as they remain identifiable. Marital property, by contrast, includes assets acquired by either spouse during the marriage. When you mix separate and marital property, , the court may deem those assets marital, exposing them to equitable distribution.
Keeping Inheritance Separate Through Proper Documentation
The key to protecting your inheritance lies in planning what you intend to do with inherited assets before you take action and keeping source documentation to allow tracing assets back to the inherited source. We advise clients to:
- Talk to a Lawyer – Before you take possession of inherited property, speak to an attorney about what you plan to do with the money and how to best structure the plan.
- Maintain Separate Accounts – Generally, deposit inherited funds into accounts titled solely in your name. The account should never have held marital funds. Often, it is best to open a new account.
- Document All Transactions – Record dates, amounts, sources, and purposes whenever you use inherited assets. In many cases, tracing goes back decades in time, further back than the time frame financial institutions retain records. You should personally retain records. This paper trail is vital to prove your claims in court.
It is your burden to prove that property is your separate, non-marital property. Proper documentation under 750 ILCS 5/503(b) allows us to trace your inheritance from receipt through any transactions. When the court reviews the distribution of property, without clear records, it is difficult to prove your separate property claims.
Practical Steps To Avoid Commingling
We often see well-meaning clients accidentally convert separate, non-marital property into a marital asset. Avoid these common pitfalls:
- Joint Accounts – Never transfer inherited funds into a joint checking or savings account.
- Home Improvements – If you use inherited money to renovate a marital home, consider a written agreement quantifying the contribution and allowing for reimbursement upon divorce or sale.
- Investments – Keep inherited investment accounts separate and in your name alone. Do not contribute marital funds to the account.
When clients take precautions, we can more easily argue under 750 ILCS 5/503(c) that their inheritance remained their separate property, safeguarding it from division.
Prenuptial And Postnuptial Agreements
If you anticipate a significant inheritance, a prenuptial or postnuptial agreement provides an extra layer of protection. These agreements, governed by 750 ILCS 5/401 et seq., allow you and your spouse to contractually confirm that inherited assets remain separate. Additionally, the agreement can prevent outcomes that convert a non-marital asset into marital property. We draft clear, enforceable provisions so there is no ambiguity—agreements that courts routinely uphold when executed with full disclosure.
Handling Real Estate Inheritances
Real estate poses unique challenges. If you inherit real estate and wish to keep it separate:
- Title In Your Name Only – Ensure the deeds list only you as the owner.
- Refinancing the Mortgage – If the bank requires both you and your spouse to be on the title, make sure there is a written agreement with your spouse about the property remaining your separate property.
By following these guidelines, you help protect your inherited real estate under 750 ILCS 5/503(a)(1).
When You Have Already Commingled
If commingling has occurred, we can review your records to determine if your separate property claim is compromised and if so, whether you can pursue a reimbursement claim that mitigates the loss. This process requires detailed financial analysis and legal advocacy, which we provide every step of the way.
Consulting With Experienced Counsel
Inherited assets often represent years of family history and sacrifice. As Chicago divorce attorneys, we guide clients through complex financial decisions from day one. We review your estate plan and current finances and draft agreements tailored to your situation. With our support, you maintain control of what’s rightfully yours.
Division Of Assets Frequently Asked Questions
What Qualifies As Inherited Property Under Illinois Law?
Inherited property includes any assets you receive through a will, trust, or intestate succession. Under 750 ILCS 5/503(a)(1), these assets remain separate as long as they are not mixed with marital property.
How Do I Prove That My Inheritance Remains Separate?
You prove separate status by presenting documentation – account statements, deeds in your name alone, and records of transactions. Illinois courts use a tracing analysis to follow the inheritance through any changes.
Can I Use Inherited Money To Pay Marital Expenses?
If you choose to use inherited funds for bills or renovations, you should record those transactions clearly and consider a reimbursement agreement under 750 ILCS 5/503(c).
What Happens If I Accidentally Commingled My Inheritance?
If commingling occurs, you may still trace the separate portion of your inheritance. We work with financial experts to disentangle funds, identifying what remains separate and arguing for its protection in divorce proceedings.
Are Prenuptial Agreements Always Enforceable In Illinois?
Prenuptial agreements are generally enforceable if they meet statutory requirements under 750 ILCS 5/401–407. They must be in writing, signed by both parties, and entered into voluntarily with full financial disclosure.
Does Inherited Real Estate Stay Separate If I Live In It With My Spouse?
Living in inherited property can blur lines. To keep it separate, maintain title solely in your name, and consider a written agreement clarifying ownership under 750 ILCS 5/503(a)(1).
Can My Spouse Contest My Inheritance In Divorce?
Yes, your spouse may argue that inherited property has been transmuted into marital property. That’s why thorough record-keeping and legal agreements are essential. We prepare the evidence and legal arguments to defend your separate property rights.
Should I Update My Estate Plan Before Divorce?
Yes. Reviewing beneficiary designations, trust documents, and deeds can prevent disputes. We help clients update their plans to reflect current wishes and protect assets during and after divorce.
Protect Your Inherited Assets With Our Legal Team
If you’re facing divorce and want to shield your inheritance, we’re here to help. At Michael C. Craven, we have extensive experience guiding Chicago clients through asset protection and divorce proceedings under Illinois law.
To schedule a consultation with our Chicago divorce lawyer, Michael C. Craven, please call our office at (312) 621-5234. We represent clients throughout Chicago, Illinois, and will work tirelessly to safeguard your family legacy.
