What you should know about commingled inheritances and divorce

If you receive an inheritance while you’re married, it’s yours to keep if you divorce, right? Not necessarily.

It depends on whether the inheritance has been commingled. You owe it to yourself to learn more about this concept if you have recently received an inheritance and are considering divorce.

What does commingling entail?

Two types of assets come into question when a couple divorces. There are always exceptions to the rule, but basically, there are separate assets, which are ones that you owned prior to your marriage or funds you have since generated off of them. There are also marital assets that you have acquired since your marriage.

Your spouse wouldn’t generally be entitled to stake a claim to any of your separate assets. However, if you share them with your spouse, then they may become commingled.

For example, if you take the rental income that you make off our a home you solely owned and have maintained with personal funds coming into the marriage and pay for something that your spouse benefits from, then the asset may become commingled. Your spouse would potentially gain the right to stake a claim to that once-separate asset if this were to happen.

Do property division laws apply differently to inheritances?

New York subscribes to the equitable distribution doctrine. The judge presiding over your divorce would typically review any settlement you and your spouse reach to ensure that the distribution you arrived at is fair.

The court may also be called upon to decide if the property is separate or marital if you can’t agree on that yourselves. An inheritance would generally be separate property no matter when a spouse received it. However, it can become marital property if it’s commingled. If this were to occur, you might have to divide the inheritance you received with your spouse.

It can be disappointing to find out that your spouse is entitled to part of your sizable inheritance when you were counting it to cover your future expenses. Aggressive property division negotiations will be necessary if you intend to preserve as much of what your loved one left you for yourself as possible.