One question that frequently arises in the context of divorce is whether one spouse may claim rights to another spouse’s inheritance that was acquired either before or during the marriage.
At divorce, property is classified as either marital or nonmarital. Nonmarital property is restored to each spouse as his or her separate property and marital property is equitably divided between both spouses. In Kentucky, an inheritance is generally classified as the separate property of the spouse who received it and is not subject to equitable division, even if inherited during the marriage. KRS 403.190 (2)(a). However, there are some situations in which one spouse’s inheritance may be considered part of the marital estate and subject to property division.
Disputes over inherited property are most likely to arise when the inheritance has been “comingled” with marital assets. The spouse claiming nonmarital property has the burden of tracing the inheritance to existing assets. An example of this is when one spouse receives an inheritance upon the passing of his or her grandmother during the parties’ marriage and then deposits those funds into a jointly held bank account that contains marital funds. The inheritance could also become comingled if the inheritance funds are used to make improvements to the parties’ home. In both instances, the inheritance may be considered marital property if it cannot be traced. Generally, that means providing bank statements for every month from the deposit of the inheritance to show that the account balance has never dropped below the unlimited amount.
The best way to ensure that your inheritance does not become subject to property division is to keep it separate from marital property. Thus, if you received an inheritance during the course of your marriage, or even if you received an inheritance prior to marriage, you should keep detailed records of all deposits and withdrawals for the accounts which hold your inheritance from the date of inheritance or date of marriage, whichever is later, and/or documentation showing that any improvements to real property or other assets were made with inherited funds so that if challenged, you are able to “trace” your inheritance.