One of the most common questions during divorce is: “Will an inheritance remain mine?”
The answer depends on how the inheritance was managed during the marriage. While inheritances are generally considered separate property, certain actions can cause them to be reclassified as marital property and subject to division. Understanding how the law views inheritances, and the mistakes that can put them at risk, is critical to protecting long-term financial stability.
Separate vs. Marital Property
Divorce law typically categorizes assets into two groups:
- Separate property: Assets owned prior to marriage or received individually through inheritance or gift.
- Marital property: Assets acquired during the marriage, usually subject to division regardless of whose name is on the title.
Although inheritances begin as separate property, they can lose that status depending on how they are treated during the marriage.
When an Inheritance Remains Separate
An inheritance is more likely to remain protected in divorce if:
- The funds are kept in an account held solely in the recipient’s name.
- They are never deposited into joint bank accounts.
- They are not used for shared household expenses.
- Documentation clearly traces the inheritance to its source and shows it has remained under individual control.
For example, keeping inherited funds in a separate account with a clear record of origin helps strengthen the case for the inheritance to remain outside the marital estate.
How an Inheritance Can Become Marital Property
Inheritances may lose their separate status if they are mixed, or “commingled,” with marital assets. Courts may reclassify inheritances as marital property if:
- Inherited money is deposited into joint accounts.
- Funds are used for marital purposes such as mortgage payments, household expenses, or vacations.
- Inheritance money is applied as a down payment on jointly titled property.
- A spouse’s name is added to the title of inherited real estate or other property.
These actions often occur with good intentions, but they can significantly affect how inheritances are treated in divorce.
Common Mistakes That Put Inheritances at Risk
Certain decisions frequently lead to the loss of an inheritance’s separate classification, including:
- Mixing inherited funds with marital checking or savings accounts.
- Paying off joint debts with inherited money without maintaining proper documentation.
- Retitling inherited property to include both spouses’ names.
Each of these actions can transform a separate inheritance into marital property, subjecting it to division.
Best Practices to Protect an Inheritance
Steps that can help safeguard an inheritance include:
- Keep accounts separate. Place inherited funds in an account held solely in the recipient’s name.
- Maintain thorough documentation. Preserve records that trace the inheritance and its use.
- Use caution when spending. Avoid applying inherited funds to joint expenses or property without understanding the legal implications.
- Seek professional guidance. A financial or legal professional can clarify how specific actions may affect classification.
Being intentional from the start provides the best chance of keeping an inheritance separate in divorce.
Why Professional Guidance Matters
The difference between preserving an inheritance and losing part of it often depends on small details—such as documentation, account structure, and financial decisions made years earlier. Tracing funds and analyzing how they have been used is often necessary to determine whether an inheritance is separate or marital property. Professional guidance can help avoid costly mistakes and ensure that assets are classified correctly.
Final Thoughts
Inheritances are not automatically protected in divorce. While they begin as separate property, choices such as depositing funds into joint accounts or retitling property can put them at risk. Keeping inheritances separate, maintaining detailed records, and consulting professionals are essential steps for safeguarding these assets.
At TruNorth Divorce Solutions, clients receive guidance on navigating complex financial issues in divorce, including the treatment of inheritances. Those with questions about how an inheritance—or any other asset—may be classified are encouraged to book a complimentary consultation to gain clarity and protect their financial future.
