Generally, the concepts of equitable distribution and community property distribution in divorce cases do not apply to property that a spouse inherits from a third party during marriage. Ordinarily, property that a spouse inherits from a third party during marriage is considered that spouse’s separate property. Inheritance includes acquisition through wills, trusts, probate, or intestacy.
Property bequeathed to both spouses usually is not regarded as separate property. If the property a spouse inherits cannot be located or is commingled or merged with the marital estate to the extent that it is difficult to trace as separate property, then the inherited property generally is presumed to be marital property. Inheritance can become marital property if the acquiring spouse has not maintained it in a separate account, has paid taxes on it out of marital assets, or has mixed it with marital assets. Commingling can result merely from allowing the non-acquiring spouse to use the inherited property for a regular period of time.
Nine community property states consider property that a spouse inherits from a third party during marriage to be that spouse’s separate property for purposes of distribution in divorce. Thus, in a community property state, property acquired as inheritance generally is not subject to the ordinary one-half division of community property.
For property that a spouse inherits during marriage while residing in a non-community property state and before the spouses move to Washington, California, Arizona, or New Mexico, those states apply some version of the “quasi-community property” concept. For purposes of divorce in one of those four states, the character of such inherited property depends on whether it would have been community property if inherited while the spouses resided in a community property state. As property that a spouse inherits from a third party during marriage in a community property state is that spouse’s separate property, its treatment as quasi-community property in a divorce would be the same as if it were community property.
General rules apply to the character of property that a spouse inherits from a third party during marriage, but property characterization in divorce proceedings is governed by a detailed statutory and case law framework in each individual state. It always is best to consult an expert on such matters.
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