Q: My wife and I plan to buy a home early next year. The cost to be paid is roughly half with the money I am receiving in an inheritance and half via a mortgage with my wife. Is there a way to structure the purchases so that the value of my inheritance remains outside of our marital property? — James
A: The question of unequal contribution frequently arises in my practice. I usually see it in one of two contexts. The first variation is like yours, where one of the spouses contributes the down payment using money they inherited or had before the couple married. The other is a situation that usually involves a second or third marriage where each spouse wants to ensure their children from a prior marriage inherit their half of the marital home.
Fortunately, with proper planning, there are several ways to set this up, depending on your circumstances.
For many people, a trust can be a powerful and flexible solution. A trust agreement is a legal arrangement that allows you to own property and manage it according to terms you agree upon. This flexibility lets you control your financial planning, allowing you to decide, for example, that when the property is sold, you or your heirs get the down payment back, the remaining mortgage gets paid off, and you split the remaining equity with your wife.
Instead, you could execute a post-nuptial agreement. This type of agreement is similar to a pre-nuptial agreement, but it is created after the couple is married to outline the division of assets and financial responsibilities in case of a death or divorce. It is used to protect individual assets, clarify financial rights and obligations, and make a clear plan for asset distribution to reduce conflict in the future.
I have also seen the spouse contributing most of the down payment, treating it like a loan, and recording a mortgage on the property. This option may not be available to you for various reasons, such as restrictions from the new bank loan you are getting, and may have tax disincentives. However, in the right situation, this could be a good solution.
Given your situation and the various options available, it’s important to seek the assistance of an appropriate professional to guide you through the legal intricacies and find the best solution for your circumstances.
Board-certified real estate lawyer Gary Singer writes about industry legal matters and the housing market. To ask him a question, email him at gary@garysingerlaw.com, or go to SunSentinel.com/askpro.
