Inheritances can be a sticky issue during a divorce. However, unless an inheritance is given and named to both spouses, the general rule is that an inheritance is a nonmarital asset of the inheriting spouse. There are several situations that could turn the nonmarital inheritance into a marital asset. For example, if the inheritance received is money and is deposited into a jointly titled bank account, or if it is deposited into a bank account in which income is also deposited, then the inheritance could be determined comingled by the court and designated a marital asset to be equitably divided during a divorce.
Inheritances are not limited to cash payments. If you receive your parent’s retirement plan or inherit an interest in a home, these can also be comingled if not maintained properly. If you receive a retirement plan, do not roll it into your retirement plan or liquidate it and deposit the funds into a joint account or a marital account. Simply leave it in the investment vehicle through which you inherited it and it is protected. If you inherit an interest in a home, do not use marital money, such as income or savings to pay taxes or pay the mortgage if one exists or to renovate the home. All of those actions can create a marital interest in a nonmarital asset.
