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Addressing inheritances in a divorce

On Behalf of | Jan 4, 2021 | Divorce |

Couples ending their marriage face a tangle of laws and complications when dividing their property. Their actions can determine whether an inheritance will be divided during their divorce.

Community property

Community property is jointly owned by both spouses in Texas and undergoes equitable division in a divorce. Separate property is owned by one spouse and is not divided.

Income or assets earned or acquired during their marriage is usually community property. Both spouses have equal rights to this property.

Inheritances are different. A spouse may keep separate ownership of an inheritance received before or during marriage if the inheritance is not mixed or commingled with marital property.

Commingled property

Both partners own funds or assets that were commingled during their marriage even if these came from one spouse’s inheritance. Commingled funds are used by both spouses, may pay for expenses incurred by the spouses or a non-inheriting spouse, or include contributions from both spouses.

An inheritance is commingled, for example, when it is deposited into the couple’s joint checking account and both spouses deposit funds and write checks on that account. This inheritance will likely be divided in a divorce.

The inheritance is not commingled if it is deposited into a separate account accessible only by one spouse. That spouse may not use those funds to pay for joint expenses.

An inherited house is more complicated. It is joint property if both spouses live in it. To keep it separate, the inheriting spouse must not spend any joint funds on repairs and maintenance. If it is used a rental property, that income should be kept separate from other income received by the couple.

Intent

Courts consider a spouse’s intent. A spouse who wants to keep an inheritance separate should keep account statements and other documents indicating how the inheritance was spent and their intention of keeping these funds separate.

The other spouse can also present proof that they are entitled to a share of a house, for example, because they performed some repairs. But the inheriting spouse may also present evidence that the repairs were performed over their objections.

An inheritance can become jointly owned through transmutation or over time if it is commingled among the couple’s joint assets. A spouse may try to convince a court that that they intended to keep the property separate and that the commingling was unintentional.

Agreement

Spouses may also enter to pre-nuptial agreement before their marriage or a post-nuptial agreement afterwards. These contracts can cover the allocation of inheritances and other property and other divorce issues.

An attorney can help a spouse deal with this matter. They can also help pursue a fair and reasonable settlement.