“Money does not change people, it unmasks them.” – Henry Ford

Most people
do not enter a marriage with the idea of ending it. But almost half of
marriages do end. Dennis and Meghan were married for almost 20 years and had
two teens.

Five years
ago, Meghan inherited half a million from her mother. She was, after all, the
only child her parents had. Aside from some fun family trips, she put the bulk
of the money, $350,000 to be exact, towards the mortgage of the family home.

Now, they are
calling it “quits.” Dennis had found someone else at work.

Commingled Assets

In the separation agreement and the dividing of assets the courts no longer saw the $350,000 that Meghan paid towards the mortgage as belonging solely to her because she had “commingled” it into an asset she already held jointly with Dennis.

An
inheritance received by one partner and kept separate from the other partner
remains the asset solely of the partner who inherited it.

But once this
is commingled to purchase a joint asset or to pay towards a joint debt, the
venture is deemed as a commingling of the asset, and it is no longer the asset
of the one who inherited it in the first place.

In many
states in the U.S., you could try and get your commingled inheritance back if you kept a very detailed paper trail of how much you
contributed. Meghan had not done that.

In her words,
“Who gets married with the idea you’re going to end up getting divorced? I
thought I was just helping out the family.”

Dennis made
substantially more than Meghan, who had taken time out to raise their two
children when they were younger. This “loss” of income in order to raise the
children would never be “recouped” by the child support she was awarded.

Once the matrimonial
home was sold, the balance of the mortgage paid off, and the proceeds divided
up, Meghan had to downsize to a much smaller house.

Her lower
household income no longer qualified her for a large mortgage, even with the
child support payments taken into account. It’s never easy to deal with the
financial fallout of a divorce, but a good book is Divorce & Money: How to Make the Best Financial Decisions During
Divorce.

A Different Scenario

Could Meghan
have done things differently? Most certainly. One way she could have approached
the situation was looking at her mother’s intentions upon assigning Meghan as
the beneficiary of the $500,000.

Would the
parent have wanted Meghan to commingle her inheritance if it meant giving part
of it away? What of the impact this decision ended up having on her
grandchildren as a result of the commingling of the inheritance?

Only Meghan’s
mother would be able to answer that question.

It’s All About Estate Planning

Estate planning is really a family affair. When you are preparing your estate plan, it may be wise to talk to your beneficiaries and explain your wishes.

There are
numerous ways to protect your family from unforeseen circumstances like death,
divorce, and disability.

In many
instances, you and your beneficiaries may have a shared vision on how you may
like your legacy to look like once you are gone.

But it all
starts with having “the talk” because it’s never ever just about the money!
It’s about loyalties, freedom, security, and even love!

Most women at
some point in their lives will have to make financial decisions on their own.
It’s never too late to learn the nuts and bolts behind how money works.

Meanwhile,
Dennis bought a new house and put his new girlfriends’ name jointly on the title,
without her putting a cent towards it. But that story is for another post!

What do
you know about estate planning in case of divorce? Would you consider talking
to your parents and children about estate planning? What do you think would be
the benefits? Let’s have a conversation!