October 24, 2013

What happens to inheritance in divorce?

Defining and distributing inheritance in divorce


Divorce clients often fear complete loss or reduction of their inheritance during equitable distribution. The question as to whether or not this asset is a marital property may change the conditions surrounding the inheritance and its role in the divorce. Determining whether or not an inheritance is marital property is the key to understanding the outcome of inheritance in divorce.

When conditions are met for the asset to be considered “marital property,” inheritance in divorce may be divisible in E.D. (equitable distribution) and a spouse may be entitled to a portion. Pennsylvania divorce statutes provide certain conditions for the equitable distribution of property. Not to be confused with “equal”, the court considers various conditions in its division process. To be as fair as possible, the court defines first what is considered a “marital” asset, and what is considered a “non-marital” asset.

A marital asset is the only property subject to division in divorce. What constitutes marital property is anything acquired by either spouse during the marriage. The increase in value of non-marital property during the marriage is also considered marital.

What does this mean for your divorce?

Fortunately, when an inheritance is left to you only, it will not be up for equitable distribution as it would not constitute as marital property. Regardless of when it was received, this would not be considered marital. Beware that any funds co-mingled with joint accounts or used for mutual benefit of both spouses may qualify as marital and therefore subject to E.D. Additionally, the inheritance may be considered marital if a spouse makes contributions to payment of inheritance taxes. If taxes on the inheritance have been paid with marital funds, this could also change the disposition of the funds.

Inheritance is not always cash, but can be property such as real estate. Difficult to keep separate while married, any inheritance presents unique hurdles during divorce. Valuation of the property or asset may be necessary and can present varying opinions for the court to evaluate pursuant to the statutes.

Because inheritance is not always cash, our Bucks County divorce attorneys can apply years of experience to analyzing a particular situation. As it is not always simple to explain to a spouse that you want to keep the inheritance money separate, there are a few possibilities when it comes to protecting an inheritance in divorce.

If the inheritance is real property such as a home, you and your attorney should closely review the deed. To maintain the property separately and keep it free from claims during E.D., the deed must not include your spouse’s name, or the name of any other party for that matter. However, if a spouse has made contributions to the maintenance and subsequent increase in value of the real property, it may be subject to equitable distribution. The maintenance of the property, including payment of taxes, with marital funds may also render it marital and subject to equitable distribution.

Discussion of “who gets what” is always difficult – especially where inheritances are involved. Large sums of money or property can raise the stakes when a couple splits. Being proactive to protect an inheritance is key but can present difficulties between spouses. To discuss inheritance in divorce, or other divorce matters, speak with the experienced family lawyers at the Law Offices of Michael Kuldiner, P.C. by calling (215) 942-2100. Call or submit an inquiry form to schedule a consultation.