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Who keeps inheritance in divorce?

On Behalf of | Jan 2, 2023 | Property Division

Many people fear losing things in divorce. In fact, this is why asset division serves as one of the worst-received parts of divorce for numerous couples.

It helps to understand what is up for division in a divorce and what items and assets a person can keep to himself or herself.

Separate property vs. marital property

The IRS discusses personal versus comingled or marital property in divorce. Personal or separate property are the assets that a person can keep to himself or herself without having to divide any of it with their spouse.

Items that fall into separate property include, but are not limited to, property acquired before the marriage, property acquired as a gift, and property acquired through inheritance.

Thus, generally speaking, any inheritance that a person receives through the length of their marriage counts as separate property and is not subject to divorce division.

When inheritance becomes community property

There are some cases, however, in which this inheritance may become commingled property. This usually involves taking action that makes the inheritance look like part of commingled property.

Actions that might make inheritance look like commingled property can include adding any community assets into the inheritance account or adding a spouse’s name to the account. Owing inheritance taxes and paying those taxes with community property might also cause the court to rule the inheritance as community property.

If the court rules a property as community or comingled, it is up for division with an ex-spouse as any other piece of comingled property. Thus, it is important to take care of inheritance from the start.