Usually, an individual owns his or her inheritance. In Florida, some circumstances may change inheritance ownership in a marriage.
Most couples don’t spend time in their marriage contemplating ways to “safeguard” their inheritance from their spouse. In the event of a divorce, however, that can change very quickly as the focus turns to “mine” rather than “ours.” At times, it can be too late to keep inheritance as personal property. It might become marital property, shared by both parties.
Florida is an equitable distribution state, which means that the court aims to divide assets fairly instead of evenly. The question is, what is fair? In Florida, if the couple is unable to agree, the court will decide.
What is Marital Property
Marital property consists of assets accumulated and earned during the marriage. If you purchase a house or a car with joint funds, those assets are marital property. Even retirement funds accrued during the marriage by one of the parties are marital property.
What is Personal Property
These assets, acquired by one spouse during marriage, are typically personal property:
- Any award for personal injury, as well as payments for lost earnings.
- Any property acquired by one party using non-marital assets.
- Any property that is part of a pre or post-nuptial agreement requires that both parties agree is the personal property of one of the spouses.
- An inheritance solely intended for one spouse, received before or during marriage.
- Property bought with inherited funds that’s in one spouse’s name. Exceptions exist if these funds mix with marital funds.
- Gifts one spouse received before or during the marriage. They must never have been for the other spouse’s benefit.
- An asset owned by one spouse before marriage, kept in that spouse’s name, and not used for the other spouse’s benefit.
How Can an Inheritance Become Marital Property
The difference between personal and marital property may seem straightforward, but a divorce can complicate the distinction. For instance, consider a house inherited by one party. If both parties lived in the house and contributed to its maintenance with marital assets, it could become marital property in a divorce. This can happen if personal and marital assets mix concerning this house. The inheriting spouse might have to share a quarter of its value in a divorce.
How to Protect Your Inheritance
To protect an inheritance, always separate personal and marital funds. The other spouse’s name should not appear on any account or property that is part of the inheritance. Don’t use marital assets to enhance inherited personal property.A family law attorney may be able to offer advice on the best means to protect your personal property during a divorce.
Creating an irrevocable trust and placing personal and only the personal property into said trust is another way to protect an inheritance. However, if marital assets like a house go into a trust, it may seem like commingling. Thus, the court could view the trust assets as marital assets. An attorney will be able to set up an irrevocable trust that can best protect personal property in the event of a divorce.
Can An Inheritance Affect Alimony
The court may not award the non-inheriting spouse with any inherited property; however, it may consider such property when determining the inheritor’s ability to pay alimony. It would be difficult for him or her to plead poverty when the inheritance indicates differently. The court may well decide that the said inheritor is the wealthier spouse and award alimony accordingly. For example, if the non-inheriting spouse is unemployed, the inheriting spouse may be ordered to pay more alimony until the other spouse finds a job.
During the marriage, the aforementioned inherited house will likely increase in value because both spouses used marital funds to maintain and improve it. The difference between the original value and the value of the improved property during the divorce is considered a marital asset as the improvement involved marital funds and the court may split such assets.
If the Inheritance is a Business
One spouse may inherit a family business while the couple is married. As this business increases in value, it can be difficult to distinguish between personal and marital property. A court might determine that the increased value of the business is marital property, while the original value at the time of the inheritance remains personal property. However, these numbers can become complex, and both spouses can benefit from a family law attorney and an experienced accountant.
Gifts the Couple Gives Each Other During the Marriage
Couples are known to give presents to each other. They may be surprised to learn that in the event of a divorce, such a present is considered marital property. If one spouse purchases expensive jewelry for the other spouse’s birthday using inherited funds, the jewels are deemed to be marital property. This may defeat the purpose of a gift, but that is how the court in the State of Florida will view the situation.
Conclusion:
Most divorcing individuals will prefer holding on to their inherited property. The best way to ensure that is to have an attorney prepare a prenuptial or post-nuptial agreement. The post-nuptial agreement will protect an inheritance received during the marriage. Both agreements should clearly state what property is personal in the event of a separation.
In all cases, the inherited property must be kept separate from any marital property. It should not be placed in the spouse’s name, nor should it be used for the spouse’s benefit. If one party has inherited a car, even if the car remains in his or her name, if the spouse uses the car, it turns from personal to marital property.
Individuals should be informed about inheritances and what can happen during a divorce.
The legal process can get difficult, which is why we always recommend that you seek the assistance of counsel; or at least have a consultation. Schedule a consultation with one of our attorneys today to review the issues of your case, the legal options you may have, and certain rights that pertain to your unique situation.
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