Divorce & inheritance law

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Divorce & inheritance law
Inherited real estate may be consider commingled in certain circumstances. (Real Estate image by Stephen VanHorn from Fotolia.com)

Inheritance rights can become complicated during a divorce. Your spouse may be able to claim a part of your inheritance depending on how the inheritance funds were used and by whom. There are also special rules about how inherited real estate is treated in a divorce proceeding. Additionally, premarital agreements can also play a role in who has inheritance rights in a divorce.

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Marital Property

In a divorce, property is first classified as either community or separate property. Both spouses have a right to claim partial ownership of all community property, while an individual spouse owns separate property. The Uniform Marital Property Act of 1983 attempted to provide a general basis for how to classify property in a divorce. Many states have altered various aspects of the UMPA in adopting local marital property laws. However, in most states inheritance is considered separate property except for under certain circumstances.

Commingling of Inheritance

You run the risk of turning your inheritance into community property if you commingle the inherited funds or property. Commingling is the act of mixing the funds belonging to one party with those of another party, according to US Legal. For example, placing inheritance funds into a joint account will commingle the inheritance. If one spouse inherits real property, yet both spouses contributed funds to invest in the property, it is considered commingled and possibly community property, according to the UMPA. However, each state has its own version of the UMPA with specifics varying from state to state. You should consult a legal professional to determine what the rules in your state are regarding commingling.

Community Property States

Although most states recognise separate property in a divorce, a few states automatically assume all assets received during marriage are community property. Therefore, in these community property states, if you received your inheritance while married, your spouse may be able to claim half. However, even among community property states, there is no uniform rule. Research state laws or consult with a legal professional to find out if your state is a community property state.

Forensic Accounting

Although it may be expensive, it is possible to regain some commingled inheritance back in a divorce. This may require what is known as forensic accounting, which is an attempt to trace marital assets back to their sources. There are also certifications available to prove this type of expertise. However, some firms may charge up to £390 per hour for this type of professional help, according to MSN.

Premarital Agreement and Inheritance

Most people who are marrying do not like to think about protecting themselves from their future spouses. However, about half of first marriages end in divorce, according to DivorceRate.org. Dissolving a marriage brings about many financial conflicts, including inheritance rights. If you have children from a previous marriage, this may be a concern. A premarital agreement can protect the inheritance rights of these children, according to FindLaw. Also, a premarital agreement may also be used to prevent your spouse from inheriting your estate upon death.

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