In an earlier blog post, we discussed ways that you and your spouse could divide your assets in a divorce, and the circumstances that factor into that decision. When it comes to dividing your assets, you might assume that everything will be split evenly between you and your spouse. When discussing how to divide your assets, one major concern for many couples is inheritance. You might wonder if inheritance can be split, if gifts received during a marriage are considered personal property, or how your plans related to expected future inheritance might be affected by a divorce. In today’s article, we will discuss just that.
Inheritance Received During Marriage
Many of us tend to assume that the phrase “what’s mine is yours” applies to all assets you and your spouse have accumulated, but that is not the case with inheritance. If you received an inheritance during your marriage, it is considered separate property regardless of when you received it. In many cases, this fact makes division of assets simpler.
In some cases, it can be a little bit more complicated. If the inheritance funds are combined with other marital funds, it may be more difficult to determine how much of the total amount is leftover inheritance money and how much is marital funds. For example, you may have put the inheritance check in a joint bank account that was used for various expenses over time. If you find yourself in a circumstance like this one, you can figure out how much of the total account balance is inheritance or marital funds through a process called separate property tracing. Even though this process can be complex and time consuming, it is a good option for those who find themselves in a situation where their inheritance is comingled with other marital assets.
Gifts Received During Marriage
In the same way that inheritance received during a marriage is considered separate property, personal gifts that you or your spouse received during your marriage are also considered separate property. For example, if your family gave you a piece of artwork for your birthday or a holiday, it could be argued that the gift is separate property and therefore not subject to division. The same could be said for any personal gifts that you or your spouse received over the course of your marriage. This rule does not apply to items that you and/or your spouse bought during your marriage. If you bought piece of art for your home, it would be considered marital property.
Future Inheritance
While the above examples give some insight into the rules around inheritance and gifts that have already been received during your marriage, some people are also concerned about future inheritance. Sometimes couples count on anticipated future inheritance to fund retirement, make large purchases, or to pay off debt. Even though both parties may have been counting on that future inheritance in their financial plan, the funds are considered separate property. Therefore, any future inheritance will not be considered during a divorce since it does not have any connection to the marriage. If you find yourself in a situation where you can no longer count on the future inheritance of a spouse, it is a good idea to speak with a financial professional so you can make a new plan to financially recover from your divorce.
The team at Alternative Divorce Solutions is focused on helping you understand the financial impacts of the decisions you are faced with during the divorce process. We are committed to supporting you during this trying time so that feel more confident in your decisions while building a strong financial future for your family. As always, we recommend consulting with an attorney to understand the legal components of your case. If you need a recommendation, we would be happy to provide resources to you. If you’d like to learn more about dividing assets during divorce, you can reach us at (937) 471-4654 to schedule a complimentary initial consultation.
