During a divorce, many clients come to us with concerns about inheritances and gifts they’ve received over the course of their marriage. Will they keep it? Will their spouse be able to claim those assets during the divorce? Will the inheritance be divided? Today we’ll talk about how inheritances are handled when a couple splits up.
Under Tennessee domestic law, gifts and inheritances are considered separate property during a divorce. This means that they’re not subject to property distribution by the court, and this rule applies whether you received your inheritance before or after you got married.
Now, this is the general rule about gifts and inheritances. However, it might not always work this way – especially in the case of couples who have been married for a long time, or with divorces involving a large amount of assets. The most common reason a court might designate your inheritance as marital property is something called “commingling of assets.”
Commingling of assets and how it can hurt your case
Spouses can actually invalidate any separate property in their marriage, including an inheritance, by commingling those assets with their other spouse. What this means is mixing your assets or money in with your spouse’s. Here’s an example.
Say your dear grandmother passes away and she leaves you a good sum of money in her will. If you take that check and deposit it into your joint account with your spouse, that money loses its designation as separate property and becomes marital property, eligible for equitable property division. By commingling your inheritance assets with your spouse’s, it’s no longer yours – it’s “ours.”
We’ve also heard about cases where one spouse received a home through an inheritance. However, the other spouse was able to make a claim on the home in the divorce, because of commingled assets used to pay insurance, maintenance and other household expenses.
Then how do I keep my inheritance separate?
If you and your spouse (or future spouse) agree that your inheritance is yours, and yours alone, look into signing a prenuptial or postnuptial agreement. This spells out in detail exactly what’s separate and what’s marital property and, in the event of a divorce, you can avoid disputes. And, to ensure what’s yours stays yours, don’t use financial gifts or inheritances to pay for things like mortgages or marital debts.
Additionally, don’t deposit inheritance money into a joint account, and document receipt of any gifts or property received, along with the circumstances under which you received them. This gives you further proof in the event of a future disagreement.
The courts take a number of factors into consideration when determining what’s separate or marital property. Like we said earlier, in general, an inheritance is separate property, but it’s crucial you take steps to protect it. The strategic divorce attorneys at LaFevor & Slaughter can help. To set up an appointment with one of our family law attorneys, call our office at (865) 637-6258 or use our contact form to schedule a consultation.
Patrick Slaughter is an experienced Knoxville attorney passionate about helping families resolve legal issues including divorce, family law matters and immigration. Patrick graduated from Lincoln Memorial University – Duncan School of Law, summa cum laude and is a published author. Patrick is a member of the Knoxville Bar Association as well as the Tennessee Bar Association. Contact Patrick Slaughter at (865) 637-6258 or by filling out a case evaluation below.