There are ways to ensure your inheritance doesn’t come under threat if your marriage goes south.

PERSONAL FINANCE

For many parents, leaving their children an inheritance is a very important financial objective. This could be a family home or investments.

Most parents do not want this legacy to form part of their children’s marriage regime as it could then be lost during a divorce or even on death, depending on the heir’s marriage regime.

While there are ways for the parent to protect this inheritance, actions taken by the heir could jeopardise their legacy.

David Thomson, senior legal adviser at Sanlam Trust, explains that it is common practice for a parent to include a stipulation in a will that an asset is to be excluded (protected) from the joint estate of a marriage that an heir may enter into.

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So, for example, a mother might bequeath her farm to her daughter on condition that the farm shall not form part of the joint estate of the daughter’s marriage in community of property, whether she is already married or will marry in future.

Thomson explains that, if the daughter married in community of property and the mother did not stipulate that the inheritance be excluded from her daughter’s joint estate, the daughter’s husband would be entitled to half the inheritance on death or divorce, and the farm would be at risk if he were to be declared bankrupt or have a court judgment taken against him.

While excluding the inheritance from a marriage in a will offers some protection, the actions of the heir could result in the inheritance inadvertently forming part of the marriage.

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Thomson uses the above case as an example. The daughter – married in community of property – inherited the farm from her mother. She sells the farm and some time later borrows funds from a bank and purchases a townhouse, utilising her entire inheritance (proceeds of farm sale) to partly fund the purchase in the process.

Her husband dies and his executor includes the full value of the townhouse in the joint estate. The daughter (spouse) objects. She is not his sole heir so, potentially, half of the townhouse will pass to his two children (from a previous marriage) in terms of his will. She argues that all, or at least part, of the value of the townhouse must be excluded from the estate, as she used her inheritance monies to purchase it.

Thomson says it is unlikely her objection will be accepted as the title deed to the townhouse makes no reference at all to her mother’s will and simply refers to the purchaser as married in community of property.

The deed does not record that the property falls outside the joint estate by virtue of inherited funds and the provisions of a will.