If you’ve been doing some reading in preparation for divorce, you may have seen that inheritances and gifts given solely to one spouse during the marriage aren’t subject to division. They’re considered separate as opposed to marital property.
That’s true, but there’s a big “if” there. If these assets have been “commingled” with marital assets or the other spouse’s assets, that spouse may be able to make some claim to them.
Understanding commingling
The most likely asset to become commingled is money. Say your parents left you a healthy monetary inheritance. If you deposited that in a joint account that your spouse co-owned and that you both used, that money has been commingled.
Real estate is another asset that often undergoes commingling without people realizing that they’re doing it. Say that your parents gave you the small lakeside cabin they no longer use. Your name is the only one on the title. However, when you and your spouse remodeled it, you used joint funds or maybe took out a joint loan. Perhaps you list it on Airbnb and put the proceeds in your joint checking account. You can see all the commingling that may have happened.
This doesn’t necessarily mean you have to give up commingled gifts or inheritances if your spouse wants them. It just means they may be entitled to a portion of their value based in part on how much commingling has occurred. You may have to give them something of similar value to whatever their share is determined to be.
Obviously, the best way to avoid this problem is to keep any inheritances or gifts separate. However, that’s not always feasible. Most people don’t think about potential divorce when they receive these things. They want their family to benefit from them.
Are they addressed in a prenup?
With prenuptial agreements becoming more common, couples are proactively addressing these assets with a clause to the effect that all individual gifts and inheritances will be retained by the recipient in the divorce. If you have a prenup, you may have done that and since forgotten about it. You should review your prenup before you divorce anyway.
Commingled assets are a common source of contention in divorce. Whether your spouse is seeking a portion of something you always considered “yours” or you’re the one making a claim to part of your spouse’s inheritance, you need to make a case that will persuade a judge. Having experienced legal guidance will help.