202. Inheritance and Divorce: What Gray Divorce Couples Don't Know Can Cost Them

Is inherited money really "yours" in a divorce? Not necessarily — and the details of how that money was handled can make or break your case. In this episode of We Chat Divorce, Karen Chellew and Catherine Shanahan tackle one of the most misunderstood topics in later-in-life divorce: inheritance.

Sparked by a recent Business Insider article on how baby boomer divorce is "rerouting inheritance" and reshaping retirement, Karen and Catherine break down why common assumptions — "it came from my parents, so it's mine" — often don't hold up once documentation, commingling, and state law enter the picture.

They cover:

Why inherited property isn't automatically protected, and how commingling and transmutation can change everything

The three categories of documents you need: source documents (wills, trusts, probate records), path documents (account statements, deeds, business records), and forward-looking documents (tax returns, beneficiary designations, prenups/postnups)

Why "spreadsheets are not source documents" — and what actually holds up in a settlement

The unique financial stakes of gray divorce, where inheritance and retirement often overlap and there's less time to rebuild

The emotional side of inheritance disputes — caregiving, expectation, and adult children's role (or lack thereof) in a parent's divorce

How one inherited asset can ripple through an entire settlement: affecting home division, equalization payments, cash flow, support, and taxes

Why estate planning — beneficiary designations, retirement accounts, life insurance, powers of attorney — needs review after divorce, especially when generational wealth is involved

Karen and Catherine's bottom line: inheritance in divorce isn't just about where the money came from — it's about documentation, title, use, tax consequences, and long-term stability. Before you agree to divide or waive anything tied to an inheritance, get the full financial picture first.

Referenced in this episode: Business Insider, "Baby Boomer Divorce Boom Reshaping Retirement Savings, Inheritance for Millennials" By Emily Stewart — https://www.businessinsider.com/baby-boomer-divorce-boom-reshaping-retirement-savings-inheritance-millennials-2026-6