Inheritances in Divorce
Everything you own will be classified upon a divorce in new Jersey as either 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 received are, by contrast, usually considered separate property, as are assets that were received as a gift to one spouse by someone outside of the marriage. At Goldstein Law Group, our Middlesex and Monmouth County high asset divorce lawyers can counsel clients on issues involving inheritances in divorce.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 that the inheritance is never comingled, 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 comingling of assets in a joint checking account that the spouses share. If money comes in and out of that account regularly, it can become impossible to determine which part of the account is separate property and which 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 considered marital property. If you use inheritance monies to purchase 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 completely 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 inheritance money to purchase property, the title must be in your name only, and no marital money can be used for that property, in order to maintain the separate property status. In some cases, spouses find it useful to draft a prenuptial or postnuptial agreement, to make it clear that the inheritance is going to remain separate property.
It is very common for spouses to disagree about inheritances in 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 that it was never mixed with marital property, t hereby changing its character. Even putting an inheritance check into a joint account for just a few days can result in the court later characterizing these funds as being marital funds subject to distribution.Seek Guidance from a Divorce Lawyer in Middlesex or Monmouth County
People who are concerned about inheritances in divorce can consult the experienced family law attorneys at Goldstein Law Group for advice. We run a sophisticated practice with offices in Metuchen and Brielle, serving clients throughout the Monmouth, Middlesex, and Ocean County areas. Contact us at 732-967-6777 or via our online form for a free consultation with an attorney.