Dividing Inheritance

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During a divorce, the question of dividing inheritance may come up. If you are in this situation, it’s important to know the legalities surrounding this division, and how it could affect your court proceedings.

When you are with your spouse for a number of years, whether all of those years included marriage or not, it is common for one or both of you to inherit money or property. Neither of you may think much about the issue until you are facing divorce. Inheritances then raise a lot of questions. If one of you received an inheritance, does it get divided between you? Or will you be able to keep the money and property your loved one passed down to you? Whether or not one or more inheritances are marital property depends on a number of factors. If an inheritance is part of the marital estate, then it must be fairly divided, though this does not mean cut in half.

When you have questions about dividing an inheritance, call Breeden Law Office at (919) 661-4970 and set up an initial consultation. We can review your situation, advise you on how we may need to handle an inheritance in court and the potential outcome of a dispute over the money or property, and inform you of any North Carolina divorce law that may be applicable to your case.

What Is an Inheritance?

An inheritance is money or property you receive after the death of the previous property owner. You may receive an inheritance through a will or intestate, which means a person passed away without a will and their estate was distributed based on state law.

You typically inherit property from older family members, such as your parents or grandparents. However, you can also inherit property from people you are not related to if they specifically grant you money, personal items, or real estate in their will.

If you are not sure what you received is an inheritance and you are headed into a divorce, it is best to speak with an experienced divorce attorney.

An Inheritance is Typically Not Marital Property

North Carolina General Statute §50-20 tackles distribution of marital property during a divorce. Subsection (a) states a court must determine what constitutes marital and divisible property, and then shall determine an equitable distribution of that property. In regard to the property distribution in your divorce, the first step is to define what is your individual property versus the property you share with your spouse. In §50-20(b), marital and separate property are defined.

Marital Property
This includes any real or personal property acquired by either of you during the course of your marriage, except for property determined to be separate or divisible. All property, other than separate property, acquired between the date of the marriage and the date of separation is presumed to be marital property.

Separate Property
This includes any real or personal property acquired by you or your spouse before marriage, or acquired during the marriage by devise, descent, or gift. Any money, personal items, or real estate you or your spouse receive as a gift or through an inheritance is you or your spouse’s individual property. It is presumed to not be part of the marital estate.

When an Inheritance May Become Marital Property

An inheritance you or your spouse receives from a family member or friend is generally your property or your spouse’s. Even if this money, personal property, or real estate is received during the course of your marriage, it is presumed separate. However, there are exceptions.

The Inheritance Was Specifically Granted to Both You and Your Spouse
In most situations, a will specifically divests money or other property to a specific individual by name or by relationship. An inheritance given in this way would be one individual’s separate property. However, the creator of a will could also specifically give property to you and your spouse, naming both of you. Or, the inheritance could be granted to a specific individual “and their spouse.” In either case, an inheritance given to both of you is marital property.

You Co-Mingled Your Inheritance with Joint Funds or Property
An inheritance that is originally separate property can transform into marital property. If you inherited money from a family member and deposited it into a joint account at any time during the marriage, it is likely a court would consider the inheritance a gift to your marriage. An inheritance is more likely to remain separate property if it was never placed in a jointly-held account and was never co-mingled with other funds you and your spouse both had access to.

Inherited funds may also become part of the marital estate if they are used to purchase jointly held real estate. If you received a sizeable inheritance from a loved one and you and your spouse used it as a down payment on a house or to pay off your mortgage, then those funds are a gift to the marriage. They cannot revert to your property alone, unless you and your spouse have a written agreement regarding the matter, such as a pre-nuptial agreement.

Dividing Inheritance

When an inheritance is determined to be marital property, it must be equitably divided like the rest of your shared property. A judge in North Carolina will determine an equitable division of the estate if you and your spouse cannot come to an agreement on your own. This division is intended to be fair based on the circumstances of your case. It does not always result in an even split between you and your spouse.

If the inheritance in question originally came to you from your family, yet it has been deemed marital property, you can work with an experienced divorce lawyer to fight to retain a majority of the inheritance. There may be many facts in your situation that support you receiving a more significant percentage of the inheritance than your spouse. If the inheritance was real estate that you are emotionally connected to, we will strive to ensure you are able to keep this property despite it being part of the marital estate.

Keeping Your Inheritance Separate

If you received an inheritance and you are heading toward divorce, you need to speak with an attorney about the best way to keep your inheritance separate. In most situations, so long as the inheritance was specifically granted to you, keeping inherited funds in your own separate account is enough. Never put inherited money into a joint account.

Refrain from using the funds for jointly-held property. If you use some of the money for your mortgage payments, home repairs, or other shared expenses, then those funds are considered gifts to the marriage. However, if you do you use some amount of your inheritance on shared bills, this does not automatically convert all of it to marital property. The amount that remains in your own account is still likely to be separate property.

If you inherited specific personal items or real estate, you can also strive to keep these separate from your jointly owned property. Speak with an experienced divorce attorney to determine the best way to protect your inheritance in a divorce.

How a Divorce Attorney Can Help

Whether you are preparing for a divorce down the road or your spouse has filed paperwork to begin court proceedings, divorce lawyer Jonathan Breeden can advise you on how to keep a recent inheritance separate. If you received an inheritance some time ago, he will review how it has been maintained to determine if a court would be likely to deem it separate or marital property.

When it is apparent that an inheritance became marital property, we can discuss your options with you, including whether to fight to retain a greater amount of your inheritance or whether to not fight this issue. We will also discuss how to divide an inheritance, if your case comes to that.

To learn more about when and how an inheritance may be divided, schedule a consultation with Breeden Law Office by calling (919) 661-4970 or using the online form.

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