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The treatment of an inheritance during property division

Massachusetts courts follow the principle of equitable distribution when making property division determinations during a divorce. Equitable distribution does not always mean that the assets are divided equally. It means that property the couple acquired during their marriage, including debt, is divided fairly by the court between the two spouses. However, an asset such as an inheritance is not typically lumped into this.

During the property division process, the court will take into account the separate property of each spouse. Separate property are assets that each spouse owns before the marriage and acquired during the marriage as an inheritance or a gift. Because the inheritance is considered separate property, it might not be divided between the spouses.There are times, however, when an inheritance is considered marital property. This could happen if the money is deposited into a joint bank account that is used for marital expenses, such as the purchase of a home or vehicle that both spouses use. An inheritance also becomes marital property when the money is used to renovate the marital home or pay for vehicle repairs, among other joint expenses.

However, sometimes a court rules that only part of an inheritance becomes marital property when it is deposited into a joint bank account. This may only happen if the owner of the inheritance can provide proof that the money was not supposed to be shared. In some cases, it is best for a spouse with an inheritance prior to marriage to secure the money in a prenuptial agreement. It could also be possible to secure potential future inheritances in such settlements.

Property division decisions are not always left up to the courts. Spouses who still get along with each other could settle on a property division agreement by themselves. It is advisable, however, for each party to have separate counsel review the resulting agreement before submitting it to the court.

Source: Findlaw, "Inheritance and Divorce", December 04, 2014

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