A common source of confusion and dispute when couples divorce is each spouse’s inheritances. Typically, an inheritance is left to one person (for example, an adult child) and not to a couple.
That makes the inheritance separate property that the beneficiary who inherited it can keep in a divorce and not have to divide with their spouse – unless it’s been commingled. If an inheritance (or gift) is commingled with marital assets, the other spouse can claim a portion of it.
How are assets commingled?
Let’s look at a few examples of how inheritances are often commingled:
- A spouse inherits money from a relative and puts it towards buying the couple’s first home. If that home is a joint (marital) asset, the inheritance has been commingled.
- A spouse inherits a home, and they alone take over the title. However, they use money from their joint checking account to make extensive renovations or put the cost of those renovations on a joint credit card.
- A spouse places some or all of an inheritance in a joint checking account or uses it to pay off the balance on a joint credit card or loan.
Unless you have a prenuptial or postnuptial agreement that stipulates that neither you nor your spouse is entitled to any of the other’s inheritances, you may have to share some of that inheritance if your spouse wants it in the divorce.
Commingling often happens naturally
The best way to keep an inheritance (or gift) from becoming commingled is to keep it completely separate from any marital assets. If it’s money, that means keeping it in an account that’s only in your name and not using it toward any shared asset. Of course, that’s typically not practical. Married couples’ lives and finances are typically intertwined.
There are different levels of commingling. Not every inheritance that’s been commingled has to be divided according to Ohio’s equitable distribution laws because the other spouse wants that. It can be a complex process to negotiate. That’s just one reason why it’s wise to have sound legal guidance as you divorce.