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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