How is an inheritance treated in a divorce?

Generally, inheritances are not subject to equitable distribution because, by law, inheritances are not considered marital property. Instead, inheritances are treated as separate property belonging to the person who received the inheritance, and therefore may not be divided between the parties in a divorce.

However, state laws determine how an inheritance is treated in a divorce based upon how it was treated by the heir upon receipt of the asset(s).  If it’s “shared”, the rules vary greatly among the states. For instance, if the inheritance is deposited into a joint bank account and used for joint marital expenses (called “comingling of the inheritance”), the inheritance loses its immunity. Likewise, if the inheritance is used to make improvements to the primary residence, it may also lose its immunity.

Therefore, comingling is key — if this “separate property” is used in a way that benefits joint marital assets, the inheritance is no longer considered separate property, and may be subject to equal division upon divorce.

If this inheritance has never been commingled with marital assets, a divorcing spouse will have no right for inclusion in the distribution.

If the inheritance was acquired before the marriage, it is advisable to have a pre-nuptial agreement that specifies the property is not a joint or marital asset.  However, the same rules of comingling will still apply if the assets are joined with other marital funds or used as marital property.

This issue is fact-specific and subject to state law, so it is advisable to contact a  local divorce attorney to review your facts and circumstances to best advise you of your legal options.

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5 responses to “How is an inheritance treated in a divorce?

  1. This is the law pursuant to MA Domestic Relations laws. This is not an “assessment of inheritance law”; it is a statement of MA equitable distribution laws (M.G.L. c. 208 sec 34).
    13 lawyers agreed with this answer.

  2. “My wife inherited a restaurant along with her then minor daughter before we were married – the restaurant was failing when we met and I invested my monies into the restaurant to get it back financially stable. We then married for 13 years and acted as co-proprietors of the business in every way up until we separated last year. We are getting a divorce – but she recently put the restaurant and an attached 3bdrm house which was also part of her inheritance on the market without telling me and it is currently in escrow. I did not sign anything – am I entitled to half of this co-mingled inheritance. Please, please advise. Thank you kindly. Rod

    • The first question to ask is: what state is this in? Matrimonial law regarding distribution of marital assets vary from state to state. However, generally speaking, this inheritance could be seen as having been commingled from the start of the marriage. The heir did not treat it as separate property. You can make the argument that you should be entitled to at least half the value of the appreciation of the property and your share of the value of the business.

      • Thank you so much for your quick reply and expertise. The state in question is California. Her daughter who I raised since age 4 inherited part of the business too – would this imply that the comingled property would be divided in thirds? You’re awesome…thanks again for your help!

        Rod

  3. Rod, if the daughter got a piece, it is more likely that it was left to her by the testator. A child is not party to distribution of marital assets.

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