During a divorce, spouses have to decide how to divide their marital property between them. A frequent question that comes up is how a party’s inheritance is dealt with. While an inheritance is generally considered separate property, and therefore not subject to a division, there are cases in which it can become marital. If you have an inheritance that you want to protect during the divorce, or you feel you are entitled to a portion of the other spouse’s inheritance, you probably have a few questions.
Orlando Family Team is here to provide the answers. We work with clients every day to resolve all aspects of their divorce, including property division. We’re ready to get started on your case now.
Inheritance As Separate Property in a Divorce
Equitable distribution is the process used in Florida to divide property during a divorce. Only marital property is subject to equitable distribution; separate property, of which there are several different types, is not part of this. Inheritances are one form of separate property. Even if the inheritance was received by a spouse during the marriage, it will still be considered separate.
That’s the general rule. But there are ways in which the inheritance can become marital property, and therefore be equitably divided during the divorce.
What Is Commingling?
Commingling occurs when separate property is mixed with marital property, thereby potentially transforming that separate property into marital. If a spouse receives an inheritance and later commingles it with something marital, the other spouse may be able to claim a portion of it during the divorce.
There are different ways this commingling can happen concerning inheritances. Here are just a few of the most common ones:
Failure to keep the inheritance separate from marital property. This is especially the case with cash inheritances. Spouses who receive money from a loved one often deposit that money into joint bank accounts, or sometimes even the bank account of the other spouse. Doing so makes it exceptionally difficult to separate the inheritance from the marital property since cash is fungible.
Adding a spouse to the title. Concerning homes and vehicles, there is often a temptation to re-title such assets in both spouses’ names. The problem is that this will almost certainly make the home or vehicle marital property.
Using marital assets to improve an inheritance. Again using the example of a home that one spouse inherited, it’s common for both parties to use marital funds to make improvements (such as adding rooms or even upkeep and maintenance). If you do this and later get a divorce, there’s a good chance the judge will view the asset as marital.
Both spouses using the inheritance during the marriage. Let’s say you were given a non-cash asset, such as a beach house, as your inheritance. During your marriage, you and your spouse frequently use the home to go on vacation. Not only will this increase the likelihood that marital funds will be spent on the asset, it further suggests that the property is marital.
Liquidating an inheritance and using the money for marital property or debts. Some spouses decide to sell their inheritances for cash or liquidate them. If the spouse then places that money in a separate account and doesn’t use it for marital property or debts, it will likely remain separate property. But spouses frequently take that money and spend it on marital property, acquire new marital property, or use it to pay down joint debts. That will probably turn the inheritance into a marital asset, even though it was converted to cash.
How Can I Keep My Inheritance Or Claim Part Of My Spouse’s Inheritance?
If you want to protect your inheritance from any claims by the other spouse, you should be aware that a judge will likely take a close look at your intent and conduct during the marriage for the inheritance. The same is true if you are the spouse who is claiming some of the inheritance.
However, there are different ways you can address this issue long before it gets to the courtroom. For example, many spouses sign prenuptial and postnuptial agreements that dictate how property is to be divided in the event of a divorce. The agreement can expressly state that certain inheritances shall remain the separate property of the spouse who receives it. If you receive the inheritance prior to your marriage, the prenuptial is a good option. If you receive one later after you are married, look into a postnuptial agreement.
But let’s say the other spouse is insistent upon claiming a portion of your inheritance. In some cases, it may be a good idea to allow the spouse to have a greater share of some other piece of marital property to offset any claims to the inheritance. That means carefully negotiating equitable distribution with the other spouse so you can protect your inheritance. This is a potential alternative for an inheritance with sentimental value that you don’t want to share with your soon-to-be ex.
For Questions About Divorce And Inheritance, Count On Orlando Family Team
Whether a divorce is being litigated with the other spouse, or you want to consider an out-of-court settlement, we can help with issues concerning equitable distribution. We can also advise you as to how prenuptials and postnuptials may help resolve property disputes in the event of a divorce. The main thing to know is that Orlando Family Team is here to answer any questions you have about divorce and inheritance. Reach out to us today to learn more.