Keeping an Inheritance Separate
The only time an inheritance must be shared is when a divorce court decides that it was not kept separate from marital property. A spouse who does not wish to share her inheritance may keep it separate by depositing the proceeds into a separate bank account.
Equitable Distribution Jurisdictions
A majority of states divide marital property according to the concept of equitable distribution. In equitable distribution jurisdictions, courts split property between spouses in a manner deemed fair and just. This means that one spouse may receive over 50 percent of all property acquired in marriage if a court believes it is deserved. A minority of states recognize community property; these states typically divide any property obtained during marriage equally between spouses.
Community Property Jurisdictions
In community property states, marriage is viewed as a partnership in which both spouses share assets equally. Items obtained during marriage, such as the marital home, joint bank accounts and retirement accounts, are typically considered community property. However, some property is considered separate. When one spouse receives an inheritance or a gift -- either before or during marriage -- it is considered her separate property unless she demonstrates a clear intent to share it with her spouse.
In both community property and equitable distribution states, an inheritance received by a spouse prior to, or during, marriage is considered separate. However, if an inheritance is combined with community property, or "commingled," it may lose its separate nature. For example, if one spouse inherits money and deposits it into a joint checking account, it may become community property. An inheritance may also lose its designation as separate property if part of it is used to purchase shared items or to pay community debt.
Separate property, such as an inheritance, that was shared with a spouse is usually considered as being converted to community property. A spouse who shared any portion of an inheritance may have to overcome the presumption that she meant to share the entire inheritance. Typically, a spouse contesting this presumption must provide convincing evidence that the inheritance was not meant to be shared or be able to trace the source of funds to distinguish it from marital assets.