Dividing Inheritance in Divorce

Posted on Jul 16, 2018 by Katie Carter

Dividing Inheritance in Divorce

You probably already know (or at least suspect) that things that you earned or purchased during the marriage are marital property, and will be divided in the divorce. For most people, that means we’re talking about dividing the big ticket items – real property (houses and land), retirement and investment accounts, bank accounts, and bigger items of personal property, like cars, boats, and airplanes.

How is an inheritance divided in divorce?

If you’ve received an inheritance (usually, a gift of money or property from a loved one who has died), you probably want to protect that inheritance from your soon-to-be ex spouse. If your spouse is like most spouses I’ve seen throughout the years, he’s not necessarily particularly well informed, but he is pretty well inclined to threaten to do things that would be harmful to you, either emotionally or financially. He may be telling you that he’ll take a portion of your inheritance (if it’s money) or force you to sell it and split the cash with him (if it’s real property).

How is property classified in Virginia?

In the Commonwealth of Virginia, we classify property before we divide it in divorce. It’s the same with an inheritance.

Property is either marital, separate, or hybrid. Let’s talk about what each of those classifications mean, and then we can discuss how inheritances are generally handled.

Marital Property: Marital property is anything that was earned, purchased or acquired during the marriage. (That can apply to assets – things that are worth money – and also to debt.)

Separate Property: Property is separate if it was earned, purchased, or acquired before the marriage, or if it was a gift or inheritance from someone other than your spouse. (That is to say, the diamond ring your husband gave you before you were married is yours separately because you were given it before marriage. The diamond ring he gave you after marriage is not yours separately; it’s marital property and subject to division. The diamond ring your mother gave you, and the diamond bracelet you inherited from your grandmother, whether before, during or after the marriage, is yours separately.)

Hybrid Property: Property is hybrid when it is some kind of combination of the two. A house you purchased prior to marriage looks separate on its face, but if you used marital money to make mortgage payments on it, then it becomes hybrid. Both partners have an interest in hybrid property, but that doesn’t necessarily mean that both interests are equal.

So, an inheritance is separate property?

Yes, provided that your inheritance was given to you solely, it is yours separately, whether you received it before the marriage, during the marriage, or after the marriage. Whether it’s an item of personal property, a piece of real property, or an amount of money, it is not a marital asset, and is not subject to division in the divorce.

Should I address my inheritance in the divorce?

Often, yes. You probably won’t have to make specific disclosures about the amount (though it’s possible), but I think it’s a good general practice to mention it specifically and to note that it (whatever “it” is) is separate property of yours, and that your husband has no interest in it.

I like to always mention separate property, so that there’s no confusion later on about whether a particular item was intended to be included. That way, he can’t make a different argument later. Including it doesn’t mean that he has an interest in it (obviously, I never alleged that for a single second), but it does prove to the judge what your intent and everyone’s understanding was at the time the agreement was signed.

Could my inheritance impact my divorce?

Probably not, though it’s technically possible. If you inherited, let’s say, five bajillion dollars, but during the marriage were a stay at home mom who earned nothing while your husband worked as a doctor at a local hospital and earned $300k a year, and you’re asking for spousal support, your inheritance might be relevant.

Your husband would say that it’s all true – he was the breadwinner and you stayed at home, and maybe, under normal circumstances, that would qualify you to receive support, but as a new bajillionaire, you hardly require his support anymore. That would be a relevant consideration, and the court would probably not award you spousal support on the basis of the financial independence you would achieve with your inheritance.

If it’s a smaller amount, it may be relevant or even admissible in court, but that doesn’t mean that it would terminate your right to receive spousal support. If you’re worried about this possibility, it’s probably a good idea to talk to an attorney about the specifics of your unique case. I can’t give bright line rules or specifics here; it’s just too difficult. But it’d be a good idea to talk to someone about your unique case, and what you could expect.

What if I already spent my inheritance? Can I get it back in the divorce?

That’s….a little more complicated. If you’ve already spent your inheritance, it may not be possible to get it back. We’re going to have to look into a little more detail regarding where the money actually went.
If you used your inheritance to pay off bills, you’re probably out of luck. That money was commingled with marital money, and is likely lost.

If you used your inheritance to improve real property, for a down payment towards real property, or made an investment into a specific type of investment or brokerage account, it may be possible to trace the source of that investment back to the inheritance, and give you credit for the portion of it that is yours separately. It’s fairly complicated, though, and we’d want to be sure to look carefully at all the numbers.

What if my husband received the inheritance?

If your husband received the inheritance, the same rules apply. It’s likely his separately, unless he somehow commingled the money with marital money and you can’t trace it back to its origins. There’s not much you can do to get a portion of it, unless, for whatever reason, he’d sign a separation agreement giving you a portion of it.

In a spousal support case, like if the shoe were on the other foot, we could use the evidence regarding his inheritance to prove his increased ability to pay spousal support. It may help, and it may not; it really all depends on the facts and figures involved in your specific case.

If you received an inheritance, you want to protect it. You’re already doing the right thing by asking questions and getting the information you need, so that you’re not bamboozled the first time you hear something about settlement from your husband or his attorney.

For more information, or to schedule a confidential consultation with one of our licensed and experienced Virginia divorce and custody attorneys, give our office a call at 757-425-5200.