Inheritance and Divorce

Learn whether a court can divide your inheritance in a divorce.

Does All Property Get Divided at the Time of Divorce?

Not necessarily. For purpose of divorce, the law usually categorizes property as either “marital” or “separate.” As a general rule, marital property is subject to division between the spouses; separate property isn’t. This is true whether you live in a “community property” state (like California), which divides property on a 50-50 basis, or an “equitable distribution” state (like New Jersey), which apportions property based on what the court believes is fair under the circumstances.

Is My Spouse Entitled to My Inheritance in Divorce?

That depends on a number of factors, including where you live. Each state’s divorce laws will govern how to address inheritance, in community property states and equitable distribution states as well.

In the overwhelming majority states, an inheritance is considered separate property, belonging exclusively to the spouse who received it and it cannot be divided in a divorce. That holds true whether a spouse received the inheritance before or during the marriage. But in a state like New Hampshire, for example, courts may consider an inheritance to be divisible in a divorce (unless you can persuade a judge that it shouldn’t be).

Now here’s the rub—although your state may initially view an inheritance as separate property, your actions can change it into marital property. Sometimes that happens intentionally in what is called a "transmutation of property."

An example of an intentional transmutation of property from separate to marital is where a spouse inherits a house, then puts the other spouse’s name on the deed. The spouses move in and share the costs of living there. In that scenario, if a divorce rolls around, the inheriting spouse would be hard pressed to convince a judge that the house was never intended to be marital property.

But let’s say the inheriting spouse never puts the other spouse’s name on the deed, and neither spouse lives in the house during the marriage. At some point down the road, however, the non-owner spouse contributes to improvements which increase the house’s value. At the time of divorce, a judge might determine that—although the house itself may not be marital property—the increase in value specifically due to the improvements is a part of the marital estate, and thus subject to division between the spouses.

The most common example of converting an inheritance to marital property is when the inheriting spouse “commingles” (mixes) the inheritance with marital assets. This can be intentional, but often it happens by mistake. For example, Uncle Zeke passes on and leaves you $10,000 in his will. After you and your spouse break out the bubbly and toast the kindly gentleman, you put the money in an existing savings account that’s in both your names, and which either of you can access at will. If you did that because you wanted to share the inheritance money with your spouse . . . great! Mission accomplished.

But if you thought that putting that money in the joint account was just for convenience, and that it would always remain yours alone, you may have put yourself behind the proverbial eight-ball. By commingling the inheritance with marital funds, you’ve likely converted it into marital property. You can make an argument to the court that this was never your intention, but you’ll have an uphill climb.

Can I Claim My Ex’s Inheritance Received After Divorce?

Sharing a spouse’s inheritance after divorce is a nonstarter, unless your divorce judgment specifically addresses that topic.

That said, there is a situation where an ex-spouse's post-divorce inheritance could come into play. If you’re receiving spousal support (alimony) or child support, you might be able to petition the court to increase the support amount, based on that inheritance or any interest income the principal is making.

Courts usually allow modification of support—both up and down—for a variety of reasons, such as a job loss, a spouse or child becoming disabled, or a spouse’s substantial pay increase (again, depending on the laws in your state).

You’d first have to see whether your state views an inheritance as a potential basis for a modification request. If it does, you may have viable grounds to seek an increase in support. Of course, this is going to depend in large measure on how significant the inheritance is. Your best bet for success is when the inheritance has substantially enhanced your ex-spouse’s standard of living.

Prenuptial Agreements and Inheritance

Couples are using prenuptial agreements (sometimes referred to as “antenuptial agreements”) more and more to protect assets they’ve accumulated prior to marriage. This is especially true with second marriages, where the couples tend to be older and may want to protect assets they've earmarked for their children.

A prenuptial agreement (prenup) is a binding contract that can often override state divorce law on many issues. A prenup provides the couple with an opportunity to settle in advance how an inheritance (and other property) will be treated in the future, including if a divorce occurs.

But be forewarned, there are very strict rules governing the validity of prenups, so be sure to consult a knowledgeable attorney to help you draft and/or review one.

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