Do I Have to Share My Inheritance with My Ex?

• Property division in divorce
• Is an inheritance marital property?
• Is my ex entitled to my inheritance?
• Tips for keeping property separate

When you and your spouse decide to divorce, there are several matters you must agree upon before it can be considered “settled” by the court. For example, you will need to determine how you will provide for your kids and share in their upbringing, whether your situation warrants any spousal support or maintenance, and how you’re going to divide your property.

Property division in divorce

Property division is the distribution of any property and debt you’ve acquired during your marriage. In a perfect world, a couple will decide what is fair for them and agree on who takes what. But often, property division becomes a sticking point in divorce cases. When this happens, it requires negotiation or, if that doesn’t work, a decision by the court. 

If the court gets involved, they will use state laws to guide any decisions made about your marital property.

Is an inheritance considered marital property?

Now, you may be wondering what would happen if you were the heir or beneficiary to a loved one’s estate. Do you have to share your inheritance with your ex as part of your property division?

That depends.

Defining “marital property”

Property division involves some type of “fair” division of your marital property only. 

Marital property is property acquired by a couple during their marriage. It can include things such as the following:

• Income earned by you or your spouse
• Any jointly held assets, investments, real estate, or debts acquired by you and your spouse 
• Any contributions or growth in your or your spouse’s retirement accounts

Anything acquired after you’ve separated will be retained by you as separate property.

Community property states vs. equitable distribution states

Property division looks different depending on where you live. Whereas a fraction of states are community property states, most are equitable distribution states.

In a community property state like California, all marital property is considered community property and subject to a 50/50 split. In an equitable distribution state like Utah, marital property is divided based on the unique financial circumstances of the couple, not necessarily an even split. 

In both cases, an inheritance or gift is usually considered separate property that is not subject to property division. But whether it remained separate property during the marriage is key to whether you must share it in divorce.

Free download: Property division spreadsheet

Is my spouse entitled to my inheritance in divorce?

Separate property is only considered separate until it becomes shared property. This rule also pertains to inheritance and gifts.

Commingled property

If you share your inheritance or gift with your spouse during your marriage – for example, let’s say you deposited inherited funds into a joint bank account or used it to purchase a house both spouses now own – it is no longer considered separate property. It is now “commingled” property.

Further, once you combine separate property you owned before the marriage with marital property, it becomes commingled property. For instance, if you owned a home separately before marriage but changed the deed to include your spouse, the home is now commingled property and, hence, marital property. Similarly, if you deposited separate funds into a joint bank account while married, that money is now marital property.

The same holds true for an inheritance or gift. Once it becomes something that both spouses own, whether it’s money deposited into a joint account or property purchased with that money, the inheritance or gift is considered marital property.

One way to avoid sharing an inheritance is by specifying your wishes in a prenuptial or postnuptial agreement signed by both spouses. 

Tips for keeping separate property separate

Marriage is not just an emotional partnership; it’s also a financial partnership. But in some cases, keeping your property separate has its advantages. If you want to keep some of your property separate, there are important things you can do before or during your marriage. 

• Develop a prenuptial or postnuptial agreement. Entering into a pre- or postnuptial agreement before or during your marriage can ensure that separate property remains separate if you decide to divorce. 
• Avoid commingling your assets. As explained above, once the assets you owned before marriage mix with marital assets, they are no longer “yours.” Rather, they are “ours.” Anything you would not want to lose in the event of a divorce should be kept individually titled, deeded, or held in a separate account in your name only. 
• Keep accurate records. If you did decide to use inherited assets to make a joint purchase, the court will usually consider this if you have kept very accurate records about where that money came from. 

If you would like to understand how to protect your inheritance or other separate property, at Hello Divorce, we can help eliminate the confusion. Schedule a free 15-minute call to learn about our postnuptial agreement drafting services, mediation services, legal advice/attorney services, and other information that can help you navigate the divorce process practically, cost-effectively, and without needless drama.