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What is a commingled inheritance?

On Behalf of | Jun 24, 2023 | Family Law

If your parents or grandparents give you an inheritance, it will typically be considered an asset that you own by yourself. It will be classified as a separate asset, even if you’re married. You’ll own it personally because it was a gift given directly to you. There are exceptions to this general rule, of course. Perhaps your parents will write both your name and your spouse’s name on a financial account that you’ll take over when they pass away. But, in most cases, parents directly leave their assets to their own heir, who can then share them with a spouse if they so choose.

In the case of a divorce, this usually means that an inheritance would stay with the person who initially received it. It wouldn’t count as a marital asset, so its value wouldn’t need to be divided. It’s clear that the parents’ goal was not to leave their money to an ex-spouse of one of their children. But this presumption can change if an inheritance it’s been commingled.

Mixing assets together

Commingling assets means mixing them together, combining them or allowing both partners to use those assets. Essentially, it gives your spouse some level of ownership over them. If this has been done with an inheritance, then that ownership interest will still apply during divorce, and the inheritance may be classified (partially or totally) as a marital asset. This would mean that its value would need to be divided in the event of a contentious process, even if it started out as a separate asset.

For example, perhaps your parents gave you $50,000 that you and your partner used as a down payment on your house. The house would still be a marital asset that would have to be divided in some fashion. Or perhaps your parents gave you the inheritance and you simply deposited the check in a joint bank account, where you and your spouse enjoyed using it or even just paying the bills. Again, because your spouse had access to it and benefited from those funds, this can turn it into a marital asset.

Divorce cases can often get complicated when partners do not agree about which assets are marital assets and which ones are separate assets. Seeking legal guidance can help to provide clarity, regardless of whether spouses hope to negotiate out of court or feel the need to litigate their situation.