When the majority of people get married, they will not expect to get divorced in the future. Unfortunately, nowadays, the number of divorces worldwide and in the United States is on its rise. Therefore, it is very important to know how the divorce can affect your property assets, such as an inheritance.
An inheritance traditionally has referred to a property one receives upon the death of a relative based on the laws of descent and distribution, which take effect when there is no living will. If and when a person gets divorced, it is important to know how to protect his/her asset from the possibility of having to split it with his/her spouse in the event of divorce. Each state has different laws regarding inheritance, and we highly recommend researching the state inheritance law of a specific state.
The Marital Property Act recognizes two kinds of property: community property and separate property. Community property is the property that was obtained during the marriage by either party. The community property is divided according to the Equitable Distribution Law. Nevertheless, it does not ensure that all community property will be divided equally. Any community property’s distribution entirely depends on a person’s circumstances of the marriage. Moreover, separate property is individual property that either party received before the marriage or during a legal separation, and in some cases during the marriage itself. In many legal scenarios, separate property remains the property of the original owner.
The laws of most states regulate inheritance under the separate property clause even if a person obtained his or her inheritance during the marriage. If a person who inherited a property did not use it to the advantage of both spouses, the inheritance should remain in the possession of the person who originally inherited it. However, inheritance can become community property in certain cases.
The Equitable Distribution Law covers several scenarios when one spouse needs to divide his/her inheritance with another spouse. For instance, property deed filings can be filed accidentally together with a spouse’s name. When someone inherits something, it is highly advisable to check the filing status. The filing mistake can easily occur when another spouse helps to pay the inheritance tax or both parties sign the inheritance papers. It is important to recognize that an inheritance is a possession of the person who is entitled to receive it, unless the inheritance was given to both parties. Another spouse will also be entitled to an inheritance of his/her spouse if he/she equally invested in the inheritance during their marriage. The same applies to money inheritance if both spouses place the money into a joint account with the goal to increase the money amount. In that case, the inheritance will become part of matrimonial assets, as well. It is also important to know that a spouse may be entitled to the portion of the inheritance if another spouse allows him/her to use the whole inheritance or part of it regularly. Nevertheless, this spouse will need to prove such use in the courtroom during the divorce.
As we already mentioned above most of the states have a separate property clause in case of divorce, but a few states such as Idaho, Nevada, California, Louisiana, New Mexico, Texas, Arizona, Wisconsin and Washington are strictly community states. These states recognize an inheritance as part of the community property if it is received during the marriage. It is very difficult to dispute an inheritance ruling if a person happens to live in a community property state.