How inheritance is treated during property division

Texas residents who are going through contested divorce proceeding often have concerns about how inherited assets will be handled by the court during the property division process. Generally speaking, an inheritance that was left to one spouse alone is considered the separate property of that spouse and is not included as part of community property. Therefore, an inheritance is normally not subject to division in a divorce settlement.

An inheritance may be treated as the separate property of the recipient regardless of whether it was received before or during the marriage. However, if a judge finds that a spouse shared inherited property during the marriage, the asset could lose its status as separate property. Sharing an inheritance is often referred to as ‘commingling” during divorce proceedings. Commingling of the inheritance may occur when the recipient deposits an inheritance check into a joint bank account or uses inherited assets to make a purchase that benefits both spouses.

A recipient who has commingled an inheritance may be able to hold onto the funds in a divorce if they can show sufficient evidence that they did not actually intend to share the money with their spouse. However, proving this claim may require a great deal of documentation that many are unable to produce.

When a divorce involves multiple high value assets and commingling of funds, property division can become incredibly complex. Because there is much to lose in these types of divorces, a spouse may wish to have legal representation at mediation and court proceedings. It it sometimes preferable, but not always possible, to attempt to negotiate a property division agreement rather than to leave the decision in the hands of a judge.

Source: Findlaw, “Inheritance and Divorce“, December 04, 2014