July 24, 2016
Monthly Misconception for July – “My inheritance is mine!”
Your soon to be former spouse tells you “My inheritance is mine-period-so just forget about getting a piece of it. “
Is he right?
Maybe, but not necessarily so.
Clients are often surprised when I explain that there is no specific rule or one way in which the law handles inherited assets as part of a divorce. Yes, the court is required to consider certain statutory factors, such as the contribution of each spouse to the acquisition, appreciation and preservation of an asset. But as a practical matter, what does that mean?
Courts tend to take a common sense fact specific approach to handling inherited assets. The following questions, among other, are often important:
- When was the inheritance acquired?
An inheritance received by one spouse during year 2 of a 4 year marriage may be treated very differently from an inheritance received in year 2 of a 30 year marriage or year 15 of a 16 year marriage.
- How has the inheritance been treated by the recipient spouse during the marriage?
For example, was the inheritance cash which the recipient spouse deposited into a joint bank account, comingled with other income and savings of the couple and then used to pay household expenses? Or was the inheritance a brokerage account that was automatically transferred to the recipient spouse’s individual name upon her relative’s death where it remained untouched throughout the marriage? Did the couple change their financial plans based upon the inheritance?
- What does the rest of the divorcing couple’s financial picture look like?
This might require comparing the amount or liquidity of the inheritance to the couple’s other assets or, assessing the financial needs of both spouses.
The bottom line here is that there is no fast or definitive answer. An experienced divorce lawyer can probably help a client narrow down the range of likely outcomes.
And especially in a mediated or collaborative divorce, more assets, whether or not inherited, typically gives both spouse more and better settlement options.
« Back to all news