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Keeping an Inheritance as Your Own Property in Divorce

If you received an inheritance during your marriage and are now facing divorce, you may be wondering whether you will get to keep all of the property or if your spouse will be entitled to some of it. Most assets acquired during marriage are considered marital property that is subject to division under New York law. However, an inheritance during marriage is considered the separate property of the spouse who received it — provided the inheritance is not treated as joint property.

If a relative or other loved one leaves you property from their estate, be careful how you handle it. Exercising care is important because one spouse’s separate property can easily become “commingled” with a couple’s marital property. When that happens, at least a portion of it can become subject to equitable distribution.

Commingling can occur in a number of ways. An inheritance might be deposited into a joint bank account or used to make a joint investment. This happens frequently, as many times a spouse receives an inheritance when the marriage is going well, so they don’t see any harm in putting the new-found money into a shared account or other co-owned fund. New York law is clear that when one spouse puts his or her separate property into a jointly owned bank or investment account during the marriage, it is presumed to be a gift to the marriage. The deposited funds lose their separate status unless there is convincing evidence that no gift was intended.

Assets other than cash can also be commingled. You could inherit real estate, such as an apartment building. The building may appreciate in value after you inherit it and you probably will earn rental income from it. That income is your separate property, as long as you keep it in a separate account and do not use it as general household income. But suppose your spouse helps you renovate the building, contributing time, labor and money to the project. The renovation allows you to raise the rent and improves the overall value of the building. When you get divorced, the court could decide that your spouse is entitled to some portion of the rental income or of the value of the building because of the contributions they made.

Inheritances that have been commingled may still be recognized as separate property as long as the funds are traceable. This requires gathering records of all transactions, including deposits and expenditures, and identifying their purposes. To avoid an unfair division of your inheritance, you will want to retain an experienced New York divorce attorney who knows how to handle these issues.

Based in Chester, Meth Law Offices, PC has handled complex New York divorces for more than two decades. I have deep experience helping protect the rights of clients who received inheritances during marriage. Please call 845-610-6595 or contact me online to arrange a free initial consultation to discuss your legal needs.