Generally, an inheritance becomes marital property when you transfer ownership to a jointly held asset. Here’s a handful of common ways it can happen:
- Depositing funds into a joint account
- Paying off a joint mortgage or other debt
- Purchasing a jointly held home or other property
An inheritance you receive after a divorce may be subject to a different kind of sharing: You may be required to adjust child or spousal support if you are found to have additional means to pay. This scenario is most likely to occur if you are currently paying less than the recommended level of support due to inadequate income. (Experian.com)
Is my inheritance deemed marital property?
Assets inherited by one partner in a marriage can be considered separate and owned only by that partner. However, inheritances can be ruled as marital property jointly owned by both partners and, therefore, subject to division along more or less equal lines in the event of a divorce. The difference is how and whether the inherited property is shared between the spouses. If it is kept strictly separate during the union, it is likely to be considered separate if the union dissolves. State laws govern the way inheritances are treated in marriage. These laws and practices vary widely between states, so seek local counsel to be sure.
Is a spouse entitled to inheritance money?
Broadly speaking, your spouse is not entitled to inheritance money, but bear in mind laws do vary by state. In most states, an inheritance is considered separate property, whether you receive an inheritance before, during, or after your marriage. Your spouse is not entitled to use or spend your separate property. In a divorce, separate property is typically not divided between spouses; it remains the sole property of the individual who owns it. (Experian.com)
Are gifts from parents considered marital property?
Gifts during a marriage fall under the rules of inheritance. If a parent gives a gift to only one spouse, the spouse maintains the gift in the divorce as separate property. However, if the gift(s) are comingled with the couple’s assets, it may diminish the value as separate property. Of course, laws vary by state.
Commingling is one of the most common causes of separate property turning into community property. This phenomenon is where separate property gets intermixed with community property, so much so that it becomes nearly impossible to trace.
For example, if one spouse receives a cash gift but deposits it into a joint bank account, that money becomes nearly impossible to trace. This is especially true if the funds have since been spent throughout the marriage. (trustandwill.com)
Can separate property become community property?
If you live in one of the nine states that apply community property law, understand that any assets acquired during marriage are considered community property. (There are a few exceptions, such as property acquired as a gift or through an inheritance.) If you were to go through a divorce, this property would be divided between you and your spouse based on how your state applies the law.
It’s also important to know that separate property can become community property regardless of whether you live in a separate property state.
Can my ex-wife claim inheritance after divorce
Can an ex-spouse claim inheritance? In theory, yes, but there are ways to prevent a former spouse from receiving inheritance money or otherwise allowing one of the parties to protect family wealth after a divorce. As explained, inheritance money may or may not be considered a joint asset, depending on the circumstances. Still, some things can be done to at least reduce the chances of an ex-spouse receiving inheritance money.
If both parties agree, it may be worth taking out a consent order. Consent orders are legal documents confirming the agreement that the couple has concerning their finances and protecting or dividing assets like pensions, property, savings, and investments.
The other, perhaps more commonly known alternatives, which are often entered into by couples before or after marriage, are pre-nuptial and post-nuptial agreements, which can protect their assets in the event of a divorce. (theprivateoffice.com)
How Can You Keep Your Inheritance Separate?
Inherited funds are considered separate property when held in a separate account in your name only. To ensure that your inheritance remains separate, it can’t be commingled with your marital assets.
If you receive an inheritance check and deposit it into your joint checking account—even if you intend to transfer the money into a separate account later—you may accidentally “transmute” your funds into joint property.
Divorce Mediation to work through inheritance and divorce
Divorce mediation supports couples to communicate and negotiate options for settling their affairs. In the case of inheritance assets, the mediator seeks to find an equitable and fair distribution of the assets, including inherited money, property, and stocks.
Contact us to learn more about how mediation can facilitate divorce positively and equitably.
NOTE: This content is for informational purposes only and should not be used for legal or financial purposes or decision-making. Communication does not imply an Attorney-Client relationship.