When two people divorce, there may be a disagreement about whether one spouse has rights to another spouse’s inheritance obtained during the marriage. One of the spouses can receive an inheritance during the marriage. Even if money is inherited before marriage, it may later be combined with other marital assets. In this article, we’ll discuss some of the many legal circumstances that include divorce and inheritance.
Are Inheritances Considered Separate Or Marital Property?
The laws on how inheritances are treated varies by state. Under New Hampshire law, all assets, regardless of how acquired, and regardless of which spouse holds title, are considered marital property subject to division by the court. The baseline starting point is an equal distribution of property. However, the Judge has considerable discretion and can look to various factors to decide when not to use a straight 50-50 division. One of those factors is whether assets were acquired by “gift, devise or descent”.
Inheritance During Marriage
As a practical matter, we have observed how Judges may treat an inherited asset. Judges can vary widely and there are no iron-clad rules. The New Hampshire Supreme Court will uphold a family judge’s decision unless it is blatantly unfair.
However, there are a few rules of thumb we observed for factors a Judge will look at in deciding how to treat an inheritance. It is important to note that these are not hard and fast rules that a Judge must look at. Rather they are simply our observations of the factors many judges will put weight on:
When was the inheritance received?
If the inheritance was received towards the end of the marriage, or after the parties separated, a judge is more likely to award most or all of it to the spouse who received the inheritance. On the other hand, if the inheritance was received early on in the marriage, a judge is more likely to divide it close to evenly.
Was the inheritance co-mingled with marital assets?
If the inheritance was relied upon for family purposes, and co-mingled with other marital assets, a judge is more likely to divide it close to equally.
How long was the marriage?
A long-term marriage will more likely lead to a close to equal division of the inheritance. In a short marriage a judge is more likely to award most of the inheritance to the party that received it.
What was the relationship between the spouse and the family member who made the gift?
If the spouse enjoyed a close, loving relationship with the in-laws, a judge is more likely to award a generous share of the inheritance. We had one case where a wife proved that she had taken care of her husband’s father during his elderly years, while the husband was absent due to mental illness and substance abuse. Her father-in-law had a much closer relationship with her than her husband. While that case did not go trial, the mediator felt that a judge would give the wife at least half of the inheritance, and the case settled along those lines.
What was the cause of the breakdown of the marriage?
If one spouse was at fault in ending the marriage, such as through adultery, extreme cruelty, or financial irresponsibility, the judge is less likely to award them part of the inheritance.
What is the money needed for?
If one spouse has a much greater legitimate need for the money, perhaps due to a disability, this will be a factor. In a case we handled, the wife had inherited a substantial sum shortly after the parties separated. The judge opined that he was unlikely to award the husband much, if any, of the inheritance. However, the judge also felt that because the wife would be able to afford a much more expensive lifestyle due to the inheritance, that this would be factored in how other marital assets were divided. After hearing the judge’s view, the parties settled so that the husband received 60% of the non-inherited martial assets, and his child support was waived. Since that child support would have been over $1,000 per month, and the children were still young, this had substantial value and was deemed fair by both sides.
How Do I Prove an Inheritance Should Not be Divided?
In the case of a divorce, the burden of proving that an inheritance received should not be shared with the other spouse would fall on them to convince the court that the inheritance had no bearing on the marital lifestyle.
The intent is crucial when a divorce court decides whether, or how much of, an inheritance should be divided.
To prove that the intention was to separate the inheritance, a spouse who wants to keep an inheritance will need to have records, such as account statements detailing how the funds were used. Personal correspondence can occasionally be used as documentation. For instance, if the spouse of a person who inherited a home personally made the necessary renovations, this act of sweat equity may result in joint property.
The spouse might be able to present evidence that they accidentally mixed the inheritance funds with any marital property and had no intention of doing so. If the funds or property were held in the name of the inheriting spouse and in a separate bank account, that could be evidence of the purpose of keeping the property separate.
Do I Need a Prenup to Protect My Inheritance?
Yes, a prenuptial agreement can aid in safeguarding inheritances and any separate property accumulated before marriage.
Before getting married, partners may sign a prenuptial agreement. It may include property division and distribution provisions if the couple later divorces. Prenuptial agreements are frequently desired by people with significantly higher incomes or assets than their intended spouses, or who have large amounts of inherited wealth since they can specify which property will remain separate.
Contact a family lawyer if you wish to use a prenuptial agreement to preserve your inheritance. You will require a local attorney acquainted with the state’s prenuptial agreement laws. Your attorney can get to know your needs, write the agreement (typically in collaboration with your future spouse’s attorney), and respond to any inquiries you might have.
To Keep Inheritance As Separate Property, You Must Be Very Cautious.
One minor error could grant your spouse the right to inherit half of your property. Many times, people mix their properties without even being aware of them. It is advisable to speak with a professional divorce attorney as soon as you are made aware of the inheritance if you wish to protect the separate nature of your inheritance.
If you and your spouse divorce, several methods can protect your inheritance. You can get legal counsel on how to maintain the inheritance’s separation. Contact our experienced Concord, New Hampshire divorce attorneys to learn more about protecting yourself before, during, and after a divorce.