The treatment of inheritance in divorce
During a divorce, issues often arise as to how assets are to be distributed. Specifically, you may have some concerns about how your or your spouse’s inheritance will be treated in divorce proceedings if the inheritance was acquired while you were still married. Upon your inheritance of assets acquired during marriage, the treatment of those assets in a divorce is contingent upon the way in which you handle the assets upon receipt.
Under the usual circumstances, an inheritance is not equally distributed in a divorce action because it is not regarded as marital property. An inheritance is considered to be separate property that is owned by the recipient of the assets, and thus, is not subject to division in a divorce. However, if you entered your marriage having already acquired an inheritance, then the laws of the state in which you live will decide how the inheritance is to be treated in a divorce.
Generally, if there has been “commingling of the inheritance,” or if, for example, you or your spouse deposited the inheritance into a bank account that was jointly held by both of you, and the funds were used to pay for joint marital expenses, then the inheritance is no longer separate property. However, you may be able to protect pre-marital assets by using a prenuptial agreement, which may include a future inheritance.
Another scenario is that you commingled your inheritance, but never intended to share it with your spouse. Although it is generally held that the commingling of funds changes the assets into marital property, some courts have held that only part, or none, of the commingled inheritance can continue to be separate property. However, the party wishing the commingled funds to remain separate property must show that he or she never intended to share the inheritance.
If you would like to learn more about the effect of divorce upon your inheritance, you should consult an experienced family law attorney.