Robert G. Smith, PLLC

How inherited funds are handled during property division

Before a New York judge can make a ruling about how to divide property in a divorce, a determination must be made about what property is subject to division. Any property that is deemed separate property will be exempt from property division because it is considered to be the sole property of only one spouse.

A spouse who received an inheritance before or during the marriage will usually not be ordered to part with any portion of the inheritance during a divorce. An inheritance is not divided in a divorce settlement because it is not considered to be marital property if it was left to one spouse with no mention of the other spouse.

There are, however, some situations where inherited property could lose its status as separate property. If a spouse used inherited property for the mutual benefit of both spouses, a judge may rule that the inherited property was commingled with marital property. A commingled inheritance is no longer exempt from equitable distribution in a property division order. However, a spouse who has deposited inherited funds into a joint bank account may be able to prove that they never meant to actually share the inherited funds with their spouse. Proving this claim may require a great deal of evidence.

A family law attorney may be able to help an individual who is going through a high net worth divorce to assert their right to maintain ownership of inherited property. If inherited funds were commingled in a joint bank account, the attorney may be able to help the client to gather sufficient evidence to prove that the funds were not meant to be used by the other spouse.

Source: Findlaw, "Inheritance and Divorce", December 04, 2014

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