Legal Questions: How Does Divorce Affect Inheritance?

When you are going through a divorce, one of your greatest concerns may be how it will affect an inheritance you received.

No one expects divorce to be the outcome of marriage. Actually, you invest long-term with the idealist vow "till death do you part." However, with the increasing statistics of divorce, you will want know how it can affect your assets, such as an inheritance.

First, it is wise to be aware of the Marital Property Act. This act was established to equally distribute possessions that a married couple obtained during the marriage. There are two kinds of property that fall under this act, community property and separate property.

Community property is marital assets that were obtained during the marriage by either partner. All community property is distributed according to the Equitable Distribution Law. This law doesn't necessarily mean that all community property will be divided equally. Instead, it is dispersed according to the circumstances of the marriage. Separate property is individual property or possessions that you obtained before the marriage or during a legal separation, and in certain circumstances during the marriage. Usually, separate property will remain yours after a divorce.

In most states, inheritance, no matter if you receive it during marriage, falls under the separate property clause. As long as the inheritance has not been used for the common benefit of both you and your spouse during marriage, it should remain in your possession after a divorce. However, there are situations in which inheritance can become community property to be divided with your spouse.

Whether possessions, moneys, or property, an inheritance may become commingled with the marital assets to be judged according to the Equitable Distribution Law. This can happen several ways. In one way, consider you receive a property inheritance. You and your spouse equally invest in the property to increase its value, during the marriage. The inherited property will then become community property to be distributed between both parties. This can work with money as well. If you and your spouse place the money in a joint account that will draw interest to increase the amount, the inheritance will become part of marital assets. Unfortunately, both parties do not always have to invest in the inheritance for it to become community property. If the inheritance appreciates during the marriage, there is the possibility that your spouse may receive a portion of its value after divorce.

Also, it is important to know that if your spouse helps pay the inheritance tax or any taxes on the inheritance thereof, then your spouse may be entitled to receive a portion of the inheritance if you divorce.

Another way your spouse may receive part of your inheritance is if you allow your spouse to use any portion of your inheritance on a regular basis. For example, if you allot your spouse a certain amount to use toward repairing or improving the home, the inheritance then becomes joined with the marital asset of the home. However, proof of this use will have to be presented in the case of divorce.

When you receive an inheritance, it is best to check the filing status, especially with property. Property deed filings can be filed accidentally along with your spouse's name. Keep in mind that accidental filing status can happen with money or possessions. Easily, this mistake can occur if your spouse helps pay the inheritance tax or if both you and your spouse sign for an inheritance with the misconception that it is required because you are married. An inheritance is possession only to the person that is heir to receive it, unless it is gifted to both you and your spouse.

Though most states have a separate property clause for divorce, a few still are strictly community property states. These states consider an inheritance as part of marital assets if it was received during the marriage. An inheritance ruling is difficult to dispute if you live in a community property state.

An inheritance is usually something left to you by a loved one or someone believing that you deserve to be heir of the possession. With common knowledge of how divorce can affect your inheritance, you'll want to protect your asset from the possibility of having to divide it with your spouse in the event of divorce. It is best to research your state's law regarding inheritance and divorce since each state has different laws and regulations.

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