Arons & Solomon | March 11, 2022 | Divorce
Generally, the answer is no. Your spouse will not be entitled to your inheritance after a divorce in Bergen County. However, as with almost every legal question, there are exceptions. How you treat the inheritance after you receive it will impact whether the court grants a portion of it to your spouse in a divorce proceeding.
New Jersey and Equitable Distribution of Property
New Jersey law uses equitable distribution when dividing assets between parties in a divorce action. The principles of fairness and equity dictate the distribution of marital property between the parties.
Unlike a community property state, equitable distribution is not always a 50-50 split. The judge may rule that an equitable distribution of property is 60-40 or 30-70. It depends on the facts and circumstances of the case.
However, only marital property is subject to equitable distribution. Separate (nonmarital) property remains the sole property of the spouse who owns it.
General Rule About Inheritance and Divorces in New Jersey
Under N.J.S.A. 2A:34-23, property acquired during the marriage or civil union through a gift, devise, or intestate succession is not subject to equitable distribution. Therefore, if you inherited real estate, cars, personal property, or other assets from someone during your marriage, that inheritance would not be divided between you and your spouse.
However, you must have kept the inheritance “separate” from marital property. Otherwise, the court may rule that the inheritance became marital property and part of the inheritance now belongs to your spouse.
Changing the Status of Inheritance to Marital Property
With just a few exceptions, most property that a couple receives during their marriage is considered marital property. A spouse can maintain the separate status of property inherited or owned before the marriage by keeping it separate from marital assets.
However, as soon as the separate property is commingled with marital property, it becomes subject to equitable distribution in a divorce. In other words, your spouse can claim a portion of the inheritance.
Commingling inheritance generally occurs when a spouse deposits inherited funds into a joint bank account or deposits joint funds into a separate bank account. As soon as the funds combine, the inheritance can become marital property.
However, that is not the only way to commingle property or change the status of inherited assets to marital property.
For example, Spouse A inherits a home from her parents. The home is titled in Spouse A’s name only. The following year, Spouse A uses funds from a joint bank account to pay the mortgage on the inherited home and make repairs. Because Spouse A used joint funds, Spouse B may claim the inherited home as marital property during a divorce action.
Likewise, suppose Spouse B increases the home’s value without taking title (for example, Spouse B renovates the house). In that case, Spouse B may have valid grounds for including the inherited home in the property division. Of course, Spouse A could title the home jointly with Spouse B, making the home marital property.
Maintaining Inheritance as Separate Property
If you want to prevent your spouse from obtaining your inheritance, you must maintain its status as separate property. It may be more challenging than you think. It is helpful to consult with a Bergen County family law attorney for guidance regarding inherited assets during a divorce.
Liquid assets are often easier to maintain as separate property because they can be held in an account in your name only. As long as you never commingled funds in that account, the inherited funds should remain separate property. Remember, paychecks are considered marital property.
If you have a prenuptial agreement, it may already address inheritance and property division. You may have stipulated in the agreement that any inheritance would remain separate and not subject to property division. If you do not have a prenuptial agreement, you may want to speak with a Bergen County divorce lawyer about a postnuptial agreement.
Another option is to discuss the matter with a trust attorney. Placing the inheritance in an irrevocable trust could help maintain its separate property status.
However, it would be wise to talk with a divorce attorney before setting up the trust. You need to confirm that your plans will maintain the inheritance as separate property.
Additionally, you could use the inheritance funds to purchase assets titled in your name only to keep the money separate from marital property.
However you choose to protect inherited property, you must keep detailed records. You need evidence proving that you maintained the separate status of inheritance if your spouse challenges you.
Contact the Bergen County Family and Divorce Law Firm of Arons & Solomon Divorce Lawyers for more help
Contact the experienced family attorneys at Arons & Solomon Divorce Lawyers today for legal assistance. Visit our law office in Bergen County or give us a call at (201) 487-1199 to schedule an appointment. to schedule a free consultation with our team.