Inheritance and Divorce

Inheritance can become a major point of tension in divorce, especially when one spouse believes they have a claim to money or property the other spouse received during the marriage

Inheritances are generally treated as separate property. But it’s not that simple. Inheritances can easily become commingled with marital assets through shared accounts, joint investments, or renovations to your home or other property. Even if you received your inheritance before you got married, it’s not guaranteed to be protected if you divorce.

This article addresses common legal situations with inherited assets and divorce. Learn how courts distinguish marital property from separate property, how commingling affects the outcome, and what you can do to protect your inheritance.

Situations involving inheritance and divorce vary depending on your circumstances and your state’s laws. Find an attorney near you for legal help. 

Marital vs. Separate Property

During a divorce, separating spouses divide marital property. State law dictates the division of property during divorce proceedings. A primary consideration in property division is the classification of assets as marital or separate. Generally, any asset acquired during the marriage is marital property regardless of which spouse’s name is on the title. Assets acquired by either spouse before the marriage are separate property. Questions of ownership arise when couples use separate property as a joint asset.

Community property states divide the marital estate evenly. Equitable distribution states divide marital assets according to what is “fair.” This means that the equitable division of assets may not be equal.

When Is My Inheritance Separate Property?

Whether a gift or inheritance is separate or shared is very fact specific. Courts may treat inheritance and gifts differently in different situations. If you have concerns about inherited property in a divorce, seek legal advice from an experienced family law attorney.

Inheritance During Marriage: Basics

As a general rule, inheritances are not subject to property division in divorce. This is because inheritances are not considered marital property. Instead, inheritances are separate property belonging to the person who received the inheritance. Separate property is not divided in a divorce.

Courts treat an inheritance shared between spouses differently. Each state has rules that vary significantly among the states. For example, suppose you deposit inherited funds into a joint bank account. Then you use that bank account for common marital assets. This is the “commingling” of the inheritance. In that case, the inheritance can lose its status as separate property. Transmutation is when separate property turns into marital property or vice versa. If courts have difficulty classifying the funds in an account as separate or marital funds, they are likely marital.

Similarly, if you use the inherited funds to improve joint real estate, they may also lose their separate status.

Inheritance Acquired Before the Marriage

Sometimes, spouses enter into a marriage with some prior wealth from an inheritance. State divorce laws determine how courts treat an inheritance acquired before the marriage.

Sometimes the best way to safeguard pre-marital assets is to enter a prenuptial (“prenup”) or postnuptial agreement. A prenuptial agreement is created before the marriage, while a postnuptial is made any time after the marriage. These agreements identify ownership of pre-marital assets and the treatment of future inheritance.

Suppose you keep the property separate, under a separate title, or in a separate account. In that case, the property should continue to maintain separation. Without commingling, the inheritance is generally separate property. The person who received it may keep all the funds associated with it in the event of a divorce.

Need help with a prenup or postnup? Find local legal help.

Gifts During the Marriage

Gifts given to one spouse during the marriage are generally treated in the same way as an inheritance. If a third party gives a gift to only one spouse, the spouse maintains the gift as separate property in a divorce. If the gift is commingled with joint assets, it may lose separate property status in a divorce.

Getting Married or Divorced? Get Legal Help

Inheritance laws can be tough to understand, especially in the context of a divorce. If you are getting married, a skilled attorney can help you create a sound, enforceable prenuptial agreement that can protect your inheritance if you divorce. If you’re already married, it’s not too late. An attorney can also help you with a postnuptial agreement.

If you’re facing a divorce, a divorce attorney can explain how your state’s laws apply to your divorce and how to protect yourself as you move through the process. This is a significant change in your life, and the right attorney can help you prepare for the future.

FindLaw’s directory of divorce attorneys can get you started. Enter your city or ZIP code for a list of qualified legal professionals near you. Because your state’s divorce laws are relevant, your attorney should be licensed in your state. Your search results will also show important details about potential lawyers, including ratings and whether they offer free case evaluations.