What Happens to Inheritance in a Maryland Divorce?
It may—or may not—be divided
on December 1, 2017
Updated on May 3, 2022
According to Julie Landau, a family attorney in Stevenson, discussions about inheritance come up often when clients are seeking a divorce. “When people come in and they’re talking about the prospect of divorce,” she says, “one of the things we’re going to go over in the initial conversation will be, ‘What assets do you have and how did you acquire them?’”
Under Maryland law, marital property is all property acquired during a marriage, by either party, no matter whose name it’s titled under. But what about an inheritance?
“An inheritance is not in and of itself marital property,” says Ronald Ogens, a family attorney in Bethesda. “Let’s say a person’s uncle leaves them money, either directly by their will or by a trust. They certainly would say to themselves, ‘I didn’t work all my life to give this money to my nephew’s wife.’”
Other caveats to the statute, Ogens notes, are property acquired as a gift from a third party, excluded by a valid agreement, or directly traceable thereto. Meaning, for example, if you inherit $100,000 and put it directly toward a bond for $100,000, that can be directly traced to the inheritance and is treated as a non-marital asset.
Though it inherently may be considered separate property, an inheritance can become marital property. Ogens explains a situation in which you take inherited money, and put part of it in a joint bank account with your spouse. “Under the corn theory—where all corn looks alike—once you put it into an account that has other marital funds in it, you’ve comingled it,” he says. “You can’t tell which is a non-marital dollar and which is a marital dollar. Therefore, it becomes marital.”
This mixing of money is called comingling, and there are many ways to do it. Landau offers up another example: You’re married, and you put an inheritance into an account under your own name. However, you’re also putting your earnings into that account, and taking them out to pay bills; this, too, is comingling.
Yet, if you have comingled your inheritance, it hasn’t necessarily become completely marital. In the 1990 decision Melrod v. Melrod, it was determined that, in Maryland, if a spouse comingles non-marital funds with marital funds, the property simply may lose its non-marital status. Maryland is an equitable-distribution state, meaning division of property does not need to happen equally among separating spouses.
“Even if there is some comingling, that doesn’t mean it’s not non-marital property,” says Landau. “It means there’s a claim that some part of that non-marital property became marital. The court still has to be fair. It really depends the extent to which marital money went in and came out.”
If you are expecting an inheritance, Ogens recommends contacting a lawyer to ensure it doesn’t become marital property. If you want to keep a current inheritance as non-marital property, Landau recommends keeping it in a separate account, under your own name, with no in-and-out transactions.