A family business or inheritance may represent decades of work and planning. If divorce occurs, a court may need to decide whether those assets belong only to you or whether they should be included in the division of property.
In Ohio, courts first determine which assets are marital property and which are separate property. An inheritance or business interest may qualify as separate property. However, the way you handle those assets during a marriage can affect how a court views them.
How courts classify marital and separate property?
Before dividing assets, a court must determine which property belongs to the marriage and which property belongs to one spouse alone. Examples of separate property include:
- Owning property before marriage
- Receiving an inheritance in your name
- Accepting a gift meant for one spouse
- Holding certain assets through a trust
- Keeping assets covered by a valid marital agreement
Marital property can include income earned during the marriage, assets purchased during the marriage and some increases in value that result from the efforts of either spouse. Over time, it can become harder to separate individual assets from those connected to the marriage.
How inherited wealth can become part of a divorce dispute
You may expect an inheritance to remain your separate property because it came from a parent, grandparent or another relative. In many situations, that is true. Even so, disputes can arise over how inherited assets were handled during the marriage.
For example, issues may arise if you deposit inherited funds into a joint account, use inherited money to buy jointly owned property or mix inherited assets with marital funds. In those situations, a court may review financial records and other evidence to determine whether part of the asset became marital property.
Why family businesses require special attention
If you own a family business, it may represent more than income. It may also reflect years of work, future retirement plans and goals for future generations. When reviewing a business interest, a court may consider factors such as:
- When the business began
- How much it grew during the marriage
- Each spouse’s role in the business
- Whether marital funds supported the business
The court may also consider evidence about the business’s value when deciding whether any portion belongs to the marital estate.
Good records can help establish ownership
When a divorce involves inherited assets or a business interest, records can play an important role. Trust documents, estate records, business records, property deeds and financial statements can help show where an asset came from and how you maintained it.
If records are incomplete, it may become harder to prove whether an asset belongs to one spouse or to the marriage. In cases involving inherited wealth or family businesses, those questions can affect assets that took years, and sometimes generations, to build.