Choosing to divorce can be a very emotional decision. After deciding on divorce, one of the most common concerns becomes how marital debts and assets will be divided. And if you received an inheritance during your marriage, you may wonder how a divorce affects that.
Assets can be considered separate or marital property during a divorce. This article will discuss the difference between individual and marital property in a Tennessee divorce, how an inheritance is treated, and when an inheritance may be considered marital property.
An Overview of Divorce in Tennessee
When a marriage ends, the assets, property, and debts that occurred during the marriage must be divided. In the best-case scenario, the couple can reach a fair settlement agreement that will fairly divide marital debts and assets without requiring court intervention.
If the couple cannot develop a fair agreement, the court will divide marital assets and debts based on “equitable distribution.” This means that the judge will consider many factors when deciding how things should be divided, which doesn’t necessarily mean everything will be split 50/50.
Some of the factors include:
- How long the couple was married
- The financial contributions of each party
- The financial needs of each party
- Each spouse’s age
- Each spouse’s employability
- The income of each spouse
- Standard of living during the marriage
Your inheritance could also affect this split. If it is worth significantly more than the amount of marital property, you are likely to get less of the marital property.
Separate vs. Marital Property
Next, it is essential to understand the difference between separate and marital property. Tennessee Code § 36-4-121 (2021) addresses property division and defines separate and marital property.
- Separate property belongs to only one spouse before, during, and after the marriage. This includes assets and debts. Separate property is not divided during a divorce; it stays with the spouse who brought it into the marriage.
- Martial property is anything acquired by either spouse during the marriage, regardless of whose name it is in. Marital property is subject to division during a divorce.
When an Inheritance Could Be Considered Marital Property
Whether you received your inheritance before or after your marriage, it is typically considered separate property. However, there are a couple of instances when it could be considered marital property.
Co-Mingling Funds
Co-mingling funds means mixing your inheritance with marital assets, making it impossible for the court to separate them. Most of the time, people co-mingle funds without the intention of changing an inheritance from separate to marital property.
Let’s say you inherit $50,000. You deposit the funds into your joint bank account with your spouse when you receive them. The account is then used to pay your mortgage, utility bills, and other marital expenses. That would co-mingle the $50,000 to the point where the courts would consider it marital property.
To avoid this, when you receive inherited money, put it into a bank account with only your name. Be sure to avoid combining those funds with anything considered marital funds.
Transmutation
An inheritance can also become a marital asset through transmutation. Transmutation occurs when property is changed from separate to marital property or vice versa.
Let’s say you inherited a home from a parent. You then titled the property jointly with your spouse. As soon as you put your spouse’s name on the title of the house, the status changed from separate property to marital property.
To prevent unintentionally changing property from separate to marital, you should consult with an experienced divorce attorney. They can advise you on the best action to protect your interests.
How to Ensure Your Inheritance Remains Separate Property
The best way to document your intention to keep your inheritance as separate property is through a prenuptial or postnuptial agreement. A prenuptial agreement is an agreement that spouses enter before they are married, and a postnuptial agreement is entered into after they are married. These documents detail how marital property, including property owned by one or the other spouse, will be divided in a divorce.
Still Have Questions? Attorney Hunter Fowler Can Help
While inheritance is generally treated as separate property in a divorce, there are instances when it can be considered marital property. Ultimately, the treatment of an inheritance will depend on the circumstances of each case. Enlisting the services of a qualified divorce attorney is essential to ensure you receive what is due to you during a divorce.
Attorney Hunter Fowler is a Murfreesboro divorce attorney who will always look for ways to benefit you during the divorce process. He has extensive experience fighting for his client’s rights to keep what they want and get what they deserve.
Hunter is prepared to do what it takes to ensure your needs are heard and met. Contact us today to schedule a consultation.