When marriages fall apart, it’s not always the best “timing.” For example, a divorce may occur while one spouse is anticipating a big inheritance. In this situation, the spouse who stands to inherit may worry that their soon-to-be-ex will be entitled to half or at least a portion of their inheritance.
“If I receive my inheritance while my divorce is pending in the court, will my spouse be entitled to it?” is a question that arises on occasion and reasonably so. Under New York’s equitable distribution law, only marital property is subject to division in a divorce. Marital property includes all income and assets acquired during the course of the marriage. Separate property remains separate and is not divided in divorce.
What Counts as Separate Property
Separate property includes income and assets acquired before the marriage. It also includes gifts and inheritances belonging to one spouse alone during the marriage. If you were to use separate property to buy something, such as an automobile, a house, an RV, etc., it would remain separate as well.
However, if separate property, including an inheritance is commingled with marital property, it can become “marital property” and would therefore be subject to division in a divorce. So, if you were to receive an inheritance during your marriage, even while the divorce is pending, the key is to keep the inheritance separate.
Do NOT deposit the inheritance into a joint bank account. Instead, deposit the funds into a separate bank account with only your name on it and ensure the money is not commingled with any marital property.
To keep things simple and avoid confusion or the possibility of having to split your inheritance with your spouse, you not only want steer clear of mixing the money with marital funds, but you want to avoid paying off marital debts with the money. This way, you can protect your inheritance and avoid having to share it with your soon-to-be-ex.
Next: What is ‘Wasteful Dissipation’ of Marital Assets?
Do you have further questions about property division in a New York divorce? If so, contact Jason M. Barbara & Associates, P.C. for a free case evaluation.