Assets and properties inherited by an individual through marriage can be considered separate and can be owned by that individual. But inheritances can be ruled as joint marital property owned by the couple and, therefore, subject to division on equal lines in case of a divorce. The big difference is whether and how the inherited homes are shared between both parties.
If it is kept separate during their union, it is most likely to be considered part of the union is dissolved. State laws will govern how these inheritances are treated during the marriage. These practices and laws differ widely between different states, so the services of financial advisors can be pretty helpful.
Separate and community property in marriages
The concept of separate and community property is vital to understanding how inheritances will be handled or addressed in marriage. Community properties are jointly owned by both parties and are subject to fair division in case of a divorce.
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Split properties are owned by one party and will not be divided during the proceedings. Any assets or income acquired or earned during a marriage usually are considered community property to which both parties have equal rights. But inheritances are exceptional cases. It is possible to maintain split ownerships of inheritances, including one received after or before the marriage starts, as long as inheritances are not commingled with marital properties.
Commingling properties in marriages
Both parties jointly own commingled assets or funds. When funds or assets are commingled, they are readily available for both parties to use, are used to pay expenses sustained by couples or non-inheriting partners, or include contributions from the two sides.
For instance, if cash inheritances deposit into the couple’s joint account, the inherited money has gotten commingled. Bequests are not separate but jointly owned, as well as will be divided during the divorce process. But if bequests are deposited into split accounts that only one can access, it is still separately owned. It is not subject to any form of division.
There is also a good chance that inheriting partners may not use these funds to pay for conjoined expenses if they intend to keep the money separate. When it comes to inherited properties like real estate, avoiding commingling has added wrinkles.
For instance, if both partners live in the property, it will be considered a joint property. To keep the house split, the inheriting side would also need to avoid spending joint funds on upkeep and repairs. If it is used as a rental home for income, the income would be kept split from other incomes received by both sides of the inheritance and might be considered conjoined property.
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How can intent work with an inheritance?
The intent is crucial when divorce courts are considering whether inheritances are partly or joint properties. Spouses who want to keep bequests separate will retain paperwork, like account statements, showing how these funds were spent. It will demonstrate the intent to keep the money split.
Sometimes, paperwork means personal communication. For example, suppose the other party, who inherited a home personally, performed necessary repairs on the home. In that case, the injection of swear equity can cause the property to be considered joint.
But if the inheriting party could document repairs performed over their objections, it could let the house remain an individual home. It can become a joint property through transmutation. This kind of agreement is an agreement done after the wedding, and the effect can happen gradually so that at one point, inherited houses are entirely separate, partly joint, and eventually entirely joint. If the partly owned house is accidentally commingled and becomes a jointly owned house, there is a chance that it can be reversed the commingling.
It will need to present the judiciary system with evidence that commingling was a significant error and the intent was to keep the house separate. For instance, before people decide to get married, the question they need to answer the question, “is inheritance marital property in Ohio” set in stone?
How pre-nuptial and post-nuptial agreements affect inheritances in marriages
One good way to document the intent to help keep these things separate is to have the couple sign a post-nuptial or pre-nuptial agreement. These documents can be drafted after or before the marriage starts and detail how marital properties, including properties owned when the marriage starts and inheritances received sooner or later, will be divided.
The bottom line
Unlike other properties received by individuals during the union, inheritances can be kept separate and not declared as jointly owned property. But a number of actions should be taken for this to happen, like keeping the inherited house apart from the marital house and not expanding for the other partner or the joint needs of marriages. Because different state laws govern this thing, only a lawyer who has tons of experience with the laws of a given state can provide definitive advice when it comes to this thing during the marriage.