If you or your spouse received an inheritance during your marriage, you may wonder what becomes of those assets in the event of a divorce. Generally speaking, the law considers inheritances the separate property of beneficiaries.
However, an inheritance may lose its separate property status if commingling occurs. Smart Asset explains the ins and outs of commingling, as well as the primary factor the courts consider when dealing with a commingled inheritance.
What does it mean to commingle property?
Commingled property refers to assets that are available to both parties of a marriage to use, that either party uses to pay expenses incurred by the couple or the non-beneficiary spouse, or that benefit from contributions from both parties. Though the parties may not jointly own it, the courts consider commingled property marital property and therefore subject it to the state’s equitable distribution laws.
When do inheritances become commingled property?
An example of an inheritance-turned-commingled property is a cash endowment that the beneficiary deposits into a joint checking account. Both partners write checks or deposit funds into said account and can access funds from it. In this case, the courts would consider these funds joint property and subject to equitable distribution rules.
What if your inheritance involves real property, it becomes more difficult to avoid commingling. If you and your partner live in the house or if you use joint funds to repair the property in which you do not live, the courts will consider it a marital asset.
When considering the status of an inheritance, the divorce courts will consider one major factor: intent. If you want to retain your full inheritance, you must demonstrate that you intended to keep it separate through documentation, account statements, receipts, communications and other forms of proof. If you do not have documentation, you may need help to establish the separate nature of your inheritance.
