What Happens to My Inheritance in a Divorce?

Marital property is all property acquired during a marriage. Over the course of a marriage, most couples combine their property and assets, though some property remains separate. For example, gifts and inheritances are generally separate property. Inheritance money remains separate in a divorce unless the spouse combined it with other marital assets.

What happens to an inheritance in a divorce can depend on how you treat the inheritance while married. Divorce law varies by state. For legal advice about how to keep your property in divorce proceedings, talk to a local divorce lawyer.

Inheritance and Marital Property

Discussions about inheritance often come up when clients are seeking a divorce, says Julie Landau, a family law attorney at Landau, McGee & Glickman in Stevenson, Maryland.

“When people come in, and they’re talking about the prospect of divorce, 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?'”

“An inheritance is not in and of itself marital property,” adds Ronald Ogens, a family law attorney in Bethesda, Maryland. “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.'”

Separate property includes property acquired as a gift, excluded by a valid agreement, or directly traceable to the inheritance. For example, if you inherit $100,000 and put it toward a bond for $100,000, that can be directly traced to the inheritance and is a non-marital asset.

Get the Right Divorce Guidance

The Super Lawyers directory contains the top divorce attorneys in your area. They can guide you through this process and safeguard your rights and interests.

Find a lawyer today

Inheritances Can Become Marital Property

Though originally separate property, an inheritance can become marital property in a divorce if you’ve 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 commingled it,” he says. “You can’t tell which is a non-marital dollar and which is a marital dollar. Therefore, it becomes marital.”

Commingling Your Inheritance

This mixing of money is called commingling, 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 or buy your marital home. This is commingling.

If you have commingled your inheritance, it hasn’t necessarily become completely marital. In the 1990 Maryland case Melrod v. Melrod, when a spouse commingles non-marital funds with marital funds, the property may lose its non-marital status. Maryland is an equitable-distribution state. This means division of property does not need to happen equally among separating spouses.

“Even if there is some commingling, 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 on the extent to which marital money went in and came out.”

Property Division in a Divorce

In a divorce, the spouses divide their property and assets according to their own agreement. If the spouses cannot agree on the division of assets, the court makes the decision. States generally fall into one of two categories for property division in divorce settlements: community property and equitable distribution.

In community property states, property acquired during the marriage is the joint property of the couple. During the divorce process, the couple has an equal claim to their marital property. However, separate property (acquired during marriage, received as a gift, or in an inheritance) retains separate property status as long as it remains separate.

In equitable distribution states, marital property is divided in a fair way. Equitable distribution does not necessarily mean 50-50. The court looks at several factors to divide property in a divorce case, including length of the marriage, economic circumstances, alimony awards, and contributions to the marriage.

In either type of state, as long as you keep your inheritance property separate, it remains separate property in a divorce.

Keep Property Separate With a Prenuptial Agreement

A prenuptial agreement (prenup) is a contract that the prospective spouses enter into before getting married. The agreement dictates how to treat certain property in a divorce.

Prenups are generally enforceable and can be one of the best ways to make sure your inheritance assets remain separate property. If you get inherited property during the marriage, you can sign a postnuptial agreement with your spouse.

In the event of a divorce, the prenup or postnup will protect the spouse’s inheritance.

Get Legal Help from an Experienced Attorney

If you are expecting an inheritance, Ogens recommends contacting a legal professional to ensure it doesn’t become marital property. If you want to keep your current inheritance funds as non-marital property, Landau recommends keeping them in a separate account. Keep the inherited money under your own name, with detailed records, and no in-and-out transactions.