Dividing property during divorce is rarely straightforward, and one of the trickiest areas involves gifts and inheritances. Many people assume that if they received a gift or an inheritance, it will automatically remain theirs after a divorce. However, the reality can be more complicated depending on how those assets were handled during the marriage.
Understanding how courts treat gifts and inheritances can help you protect what is rightfully yours.
Separate Property vs. Marital Property
In general, gifts and inheritances given to one spouse individually are considered separate property. This means they should not be subject to division during a divorce. However, there are important exceptions based on how the property was treated.
If a gift or inheritance was kept entirely separate from marital assets, such as by depositing inherited money into an individual bank account, it is more likely to remain classified as separate property. On the other hand, if the asset was commingled with marital funds or used for joint purposes, it may lose its separate character.
How Commingling Affects Ownership
Commingling happens when separate property is mixed with marital property to the point that it cannot be easily traced. For example, if you inherit a sum of money and place it into a shared checking account used for household bills, that money may be considered marital property during divorce.
Similarly, if you inherit a home but add your spouse’s name to the title or use marital funds to pay the mortgage or make improvements, the house may become partially or fully marital property. Courts will look closely at how the asset was used and whether both spouses contributed to its upkeep or growth.
Gifts Between Spouses
Gifts given between spouses during the marriage can also raise questions. In many cases, gifts from one spouse to another are considered marital property rather than separate property. For example, if one spouse buys the other an expensive piece of jewelry using joint funds, the court may view it as belonging to both parties rather than as an individual gift.
This distinction can be important when it comes time to divide assets and debts fairly.
Protecting Gifts and Inheritances
To better protect gifts and inheritances, there are several steps you can take:
- Keep inherited funds or gifted assets in a separate account with only your name
- Avoid using inherited funds for joint expenses or investments
- Keep clear records of when and how the gift or inheritance was received
- Consider a prenuptial or postnuptial agreement that specifically addresses gifts and inheritances
Being proactive can help ensure that valuable personal property is not unintentionally converted into marital property during the course of the marriage.
Gifts and inheritances often carry sentimental as well as financial value. In divorce, failing to handle these assets carefully can result in unexpected outcomes. Understanding the laws in your state and working with a knowledgeable attorney can make all the difference in preserving what is rightfully yours.
