Nobody likes to think about divorce when they're happily married, and most couples don't plan their day-to-day activities and decisions around the possibility. If you don't give it some thought, however, you could end up sharing your separate property if your marriage ends. Under New Jersey law, if you receive an inheritance while married, it's yours alone – unless you do something to change that.
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Only marital property is subject to division in a divorce in New Jersey. This typically includes anything purchased, earned or acquired by either spouse from the date of the wedding until they take some official action to end the marriage, such as signing a property settlement agreement or filing a complaint for divorce. Inheritances aren't "acquired," however, at least initially. They're gifted, and this exempts them from consideration as marital property. Therefore, your spouse is not normally entitled to a portion of it.
New Jersey's law regarding inherited property only applies if you consistently maintain ownership of the asset in your sole name. If you inherit cash and deposit it into a bank account that you hold jointly with your spouse, it's no longer immune from distribution. You've commingled the asset. If you place the cash in an account held in your own name, withdraw $10,000 and give it to your spouse to start his own business, the $10,000 becomes marital property because you've gifted it to him. If you inherit a home and use marital money to maintain it, any appreciation in its value might be subject to division in a divorce. In addition, the entire home could become marital property if you title it in joint names.
If you commingle your inheritance, you can't be sure how much of it the court will award to your spouse because New Jersey is an equitable distribution state. Unlike in community property states where the law requires judges to divide marital assets 50/50, equitable distribution depends on what the judge feels is fair after considering all facts and issues particular to your marriage. New Jersey's statutes include 15 separate factors a judge should consider, plus one rather ambiguous one: anything the court might feel is relevant. Some of the more firm factors include the length of the marriage and whether each spouse will be able to earn enough to sustain the marital standard of living post-divorce. These factors can contribute to a 55/45 division, a 60/40 division, or even a 70/30 division. If your spouse is disabled and unable to work full time, if you have other considerable separate assets and he has none, or if you were married for 20 years, it's entirely possible a judge could award him more than 50 percent of your inheritance if it becomes commingled marital property.
Burden of Proof
All is not necessarily lost if you commingle your inheritance, but New Jersey law puts the burden of proof on you to convince the court that it should not be divisible. You might meet that burden if you can account for all transactions regarding the asset from the time you received it until the time your marriage ends. For example, if you placed inherited funds into an account in your own name, then deposited your paycheck into that account, you've commingled or tainted it. However, if you can trace the source of each and every deposit, it's possible that a judge might only declare that their total value is marital property, leaving your initial inheritance intact as a separate asset.