I am in the process of inheriting money from my father who passed away in Texas via muniment of title. I live in Colorado.
I plan on keep all my inheritance in separate accounts and never mingle with any accounts setup after marriage.
My question is: How do I keep these accounts are separate property when they are put in my name? ie- Do I need to classify them/ label them, have spouse sign off on them?
In Colorado are capital gains and interest for these separate property accounts considered separate or community property in the event of divorce?
Secondly if the answer is capital gains are community property is there anything I can do to prevent this, such as have the assets move into a trust?
Please note my inheritance was not originally part of a trust.
Thank You
Colorado is not a community property state. I think what you are asking is whether money that you inherit would be considered marital property or your own separate property. This is a good news/bad news answer. The good news is that anything you inherit would be considered separate property. As long as you do not commingle these assets, they will remain yours. The bad news is that even though this is separate property, any interest or capital gains would be considered marital property. Short of having a post-nuptial agreement drawn up, there does not appear to be much you could do to change this.
For more information, see here: http://www.familylawplan.com/pages/maritalseparate.html
and here: http://www.colorado-family-law.com/property-debt.htm
and here: http://www.flinlaw.com/2012/09/separate-property-and-marital-property-colorado/
James Frederick
In Colorado, property that you inherit is separate property, but any increase in value in the property during the marriage (including capital gains and interest) is marital property that will be divided if you divorce. There is no way to prevent this, other than with a post-nup agreement (i.e., a trust will not shelter the increase in value).
If you want to be clear about the separate/marital property issue, you could put the inherited property in a separate account and then move the gains, if desired, into a joint account as needed. You also should keep any documentation stating the value of the inherited property at the date of inheritance. Hope this helps.
A married person who receives and inheritance and wishes to keep the inheritance as his/her separate property, must avoid commingling the inheritance with marital property, i.e. property owned jointly with his/her spouse. For example, he/she should keep the inheritance in a separate bank account or investment account. Under this scenario the inheritance would not be subject to a division if he/she files for a divorce. However, the appreciation of the inheritance would be considered martial property (and thus subject to division) unless his/her spouse relinquishes the right to a share of the appreciation by executing a Waiver or signing a Postnuptial Agreement.
Even if the money is not commingled, a spouse can receive a share of the inheritance if the spouse with the inheritance dies first. The reason for this is that under Colorado law, absent a Waiver or a Postnuptial Agreement, a surviving spouse is automatically entitled to an elective share of the deceased spouse's estate. The amount of this share is determined by a rather complicated formula involving the length of the marriage and the assets of the parties.
This area of the law is complicated, and thus you should consult an experienced estate planning attorney who also is familiar with Premarital and Postnuptial Agreements for specific guidance.
