When Does an Inheritance Become Marital Property? - Zukerman Law

When Does an Inheritance Become Marital Property?

Inheriting money or property can be a life-changing event. It brings a sense of financial security and can be a meaningful way to connect with your family history. But what happens to your inheritance if you’re married? Does it become marital property, or can you keep it separate?
The answer, like many things in family law, can be complex. In general, inheritances are considered separate property, meaning they belong solely to the inheriting spouse. However, how you manage that inheritance during your marriage can impact its status.
This blog post, brought to you by Zukerman Law Group, a trusted advisor in family law, will explore the different scenarios that can affect your inheritance’s character. We’ll discuss when it remains separate property and how certain actions can unintentionally convert it into marital property. By understanding these nuances, you can ensure your inheritance remains yours and avoid potential complications down the road.

Understanding Inheritance and Marital Property

Understanding Inheritance and Marital Property

Inheritance refers to assets passed down from a deceased person to beneficiaries, usually through a will. These assets can include money, real estate, personal property, stocks, and other investments. Inheritances can be received whether the deceased had a will (testate) or not (intestate).
Marital property is divided into family property and excluded property. Inheritances are typically categorized as excluded property. Family property includes all assets owned by either spouse at the time of separation, regardless of ownership titles, such as marital assets, jointly owned property, the matrimonial home, RRSPs, investments, and joint bank accounts. Upon separation, family property is usually divided equally unless otherwise agreed or if equal division is significantly unjust.
Excluded property includes assets owned by a spouse before the relationship and gifts and inheritances received during the relationship. Inheritances can sometimes be treated as family property, such as when the value of excluded property increases during the relationship, when dividing family property located outside British Columbia is challenging, when inheritance money is kept in a shared account, or when one spouse gifts their inheritance to their partner.
In divorce, a spouse claiming property as excluded property must prove it. Inherited funds remain separate property if kept separate during the marriage. To maintain their separate status, it is important to manage these funds carefully, withdrawing only specific amounts for marital use or placing only shared amounts into a joint account.

When an Inheritance Can Become Marital Property

When an Inheritance Can Become Marital Property

If you’re married and receive an inheritance, it could potentially be considered marital property as soon as you acquire it. There are two main ways this can happen: through community property rules or commingling property rules. Here’s how each works:

Community and Separate Property in a Marriage

Understanding the concepts of community property and separate property is crucial for determining how inheritances are managed in a marriage. Community property is jointly owned by both spouses and is subject to equitable division during a divorce. In contrast, separate property is owned by one spouse and is not divided in divorce proceedings.
Generally, any income or assets earned or acquired during a marriage are considered community property, granting both spouses equal rights. However, inheritances are an exception. An inheritance can remain separate property, whether received before or after the marriage begins, as long as it is not commingled with marital property.

Commingling Property in a Marriage

Commingled funds or assets are jointly owned by both partners. When assets or funds are commingled, they become available for both partners’ use, are used to pay couple-related or non-inheriting partner expenses, or include contributions from both partners.
For instance, if a cash inheritance is deposited into a joint checking account and both partners contribute and withdraw funds, the inheritance becomes commingled and is thus jointly owned, subject to division in a divorce. Conversely, if the inheritance is deposited into a separate account accessible only by the inheriting spouse, it remains separate and is not subject to division. The inheriting spouse should not use these funds for joint expenses if they wish to keep them separate.
In the case of inherited property like a house, avoiding commingling requires additional measures. If both spouses live in the house, it is considered joint marital property. To keep the home separate, the inheriting spouse must avoid using joint funds for repairs and upkeep. If the property is used as a rental, the rental income must also be kept separate to avoid the inheritance being considered joint property.

Seek Legal Advice from Zukerman Law Group

As you can see, the line between separate and marital property when it comes to inheritance can get blurry. The specific laws and interpretations can vary depending on your location. Even seemingly simple actions, like using some inheritance money for a family vacation, can have unintended consequences.
Consulting with an experienced family law attorney is highly recommended to ensure your inheritance is protected and your rights are understood. Zukerman Law Group has a proven track record of helping individuals navigate the complexities of family law, including issues surrounding inheritance and marital property.
Here’s how Zukerman Law Group can benefit you:
Understanding Your Rights: They’ll provide a clear picture of your legal rights regarding your inheritance, ensuring you make informed decisions.
Protecting Your Separate Property: They’ll guide you on how to manage your inheritance to keep it separate from marital funds, safeguarding your financial future.
Navigating Divorce Proceedings: If you’re facing a divorce, Zukerman Law Group can represent you effectively, ensuring your inheritance is treated fairly in the settlement.
Don’t let confusion around inheritance become a source of stress or conflict. Contact Zukerman Law Group today for a consultation. We’ll be happy to answer your questions and develop a strategy that protects your inheritance and your future.

Conclusion

Inheriting assets can be a wonderful opportunity, but navigating its status within your marriage can be tricky. While inheritances generally remain separate property, commingling them with marital funds can change their character. To ensure clarity and avoid potential disputes, keeping separate accounts and records is crucial.
Remember, every situation is unique. If you have questions about your specific circumstances or require guidance on protecting your inheritance, don’t hesitate to seek legal counsel. Zukerman Law Group’s experienced family law attorneys are here to help.

FAQs

  • 1- Does my husband get half my inheritance in a divorce?1

    Whether your husband gets half of your inheritance in a divorce depends on how the inheritance was handled during the marriage. If the inheritance was kept separate and not commingled with marital assets (e.g., deposited in an individual account and not used for joint expenses), it is likely to remain your separate property. However, if the inheritance was commingled with marital assets (e.g., deposited in a joint account or used for joint purchases), it may be considered marital property and subject to division. Specific laws and rules may vary by jurisdiction.

  • 2- Does inheritance have to be shared with the husband?1

    An inheritance is considered separate property, meaning you don’t have to share it with your spouse. However, to ensure that inherited assets remain separate, you must follow specific guidelines on how to manage and use your inherited funds.

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author

Stuart Zukerman

Stuart Zukerman, a graduate of the University of British Columbia, has over 32 years of experience in litigation with a focus on Family Law, Personal Injury, Wrongful Dismissal claims, and Collaborative Divorce & Mediation. He has extensive trial experience in divorce, child custody, spousal support, asset division, and ICBC injury claims. As an accredited Family Law Mediator, he helps resolve disputes without court intervention. Stuart has also authored papers on family law and lectured at CLE courses.