One common question that couples often have when getting divorced is how to classify an inheritance. Is this separate property, meaning it belongs only to the person whose parents left it for them? Or is it marital property that the couple owns together?
The reality is that it depends on a variety of different factors. To start with, many inheritances are initially classified as separate property by the court. The idea is that an inheritance is a direct gift and that only one person is the intended recipient. Even if they’re already married when their parents pass away and they receive that inheritance, it likely belongs specifically to them.
How commingling can happen
However, an inheritance can become a marital asset if it is commingled. This means that it is generally mixed with other marital assets or even marital funds.
One example is if the person who received the inheritance simply shares it with their spouse. Maybe they allow them to access the account, or they put the money from the inheritance into a shared investment profile, a retirement account or even just a standard bank account. Once their spouse has access to the money, then it may turn into a marital asset that is owned by both people.
Similarly, the inheritance may be used to purchase a marital asset. Some couples will use the money to buy a home, for example. That home is a marital asset if both people are involved in the purchase together, even if the funds initially came from an inheritance that only belonged to one of them.
This can lead to some complex situations where couples may dispute how assets should be classified and divided in divorce. They need to understand exactly what legal steps they can take.
