Inheritances in Divorce
Everything you own will be classified upon a divorce in New Jersey as marital property or separate property. Both spouses own the marital property, while the separate property remains the sole property of one of the spouses. The court will try to equitably divide and distribute your marital property. This is property or liabilities that were acquired during the marriage. For example, income earned during the marriage is marital property. Inheritances in divorce, by contrast, are usually considered separate property, as are assets that were received as a gift to one spouse by someone outside the marriage during the marriage. At Goldstein Law Group, our Monmouth County high-asset divorce lawyers can counsel our clients on how their inheritances may be characterized during the equitable division of property.Dividing Inheritances During the Dissolution of a Marriage
Under N.J.S.A. 2A:34-23, all inheritances, gifts, and intestate distributions received by one spouse from a third party are not subject to equitable distribution. Generally, an inheritance is bequeathed only to one of the two people in the marriage. If you inherit $1 million from your father upon your father's death after you are married, the $1 million is your separate property. Assuming the inheritance is never commingled, it will not be equitably divided or distributed upon divorce. However, it is common for an inheritance to start out as separate property but transmute into marital property during the marriage.
How does this happen? One common way an inheritance transmutes into marital property is the commingling of assets in a joint checking account that the spouses share. If money comes in and out of the account regularly, it can become impossible to determine which part of the account is separate property and which part is marital property.
Sometimes an inherited asset, such as a house, can become a mixed asset because the other spouse contributes to mortgage payments or pays to remodel the house. In that case, any increase in the value of the house is marital property. If you used the inheritance to buy a car that you put in the name of both you and your spouse, or to buy the marital home, this can also turn the inheritance into a piece of marital property that will be equitably divided upon divorce.
An inheritance must be kept separate to maintain its status as separate property. The separate status can be maintained by putting it in a bank account that is clearly separate property, in your name only. If you spend the money, the title to the property you buy must be in your name only to maintain the separate property status. In some cases, spouses find it useful to draw up a prenuptial or postnuptial agreement to make it clear that the inheritance is going to remain separate property.
It is common for spouses to disagree about the character of a particular piece of property upon divorce. If you are claiming that your inheritance is separate, you may need to prove it and be able to trace its ownership to show it was never mixed with marital property, thereby changing its character. Even putting an inheritance check into a joint account for a few days can result in the court later characterizing separate funds as marital funds.Seek Guidance from a Divorce Lawyer in Monmouth County
People who are concerned about a divorce can consult the experienced family law attorneys at Goldstein Law Group for advice. We run a sophisticated practice in Old Bridge and maintain a satellite office in Freehold, New Jersey. We also serve clients in Manalapan, Rumson, and Red Bank, as well as throughout Middlesex County. Contact us at 732-967-6777 or via our online form for a free consultation with a Monmouth County attorney.