Is Inheritance Considered Marital Property for Purposes of Equitable Distribution in NC?
The Basics of Inheritance and Divorce
If you’re facing a separation or divorce in North Carolina AND have received an inheritance, it is essential to understand the basics of property division according to North Carolina’s equitable distribution law.
The shorthand version of equitable distribution is that all property acquired by the parties from the date of marriage until the date of separation is defined as “marital property.” Marital property is then valued and divided between the parties in equitable distribution. However, this may not be the case for inheritance or other gifts.
Exceptions to Marital Assets During Property Division
As with almost any law, there are exceptions to the general rules. One exception to the general rule regarding the definition of marital property can be inheritance received by one spouse during the marriage and prior to separation.
For example, if your parent dies and leaves you the sum of $50,000 through a will and the bequest identifies you individually, then this would typically be considered a separate gift to you.
This scenario does not guarantee however, that these funds will not be considered in the marital estate and divided.
Adding Funds to Joint Accounts
If, after receiving this bequest, you deposit the funds into a joint savings account or checking account, wherein you continue to deposit marital funds and spend marital funds and your spouse does the same, this could indicate that you donated these funds to the marriage. The court may determine that by depositing your inheritance into a joint account and sharing it to some degree with your spouse that your actions have indicated an intent to make a gift of the inheritance to the marriage.
Can You Separate Inheritance and Gifts from Other Property?
The most effective way to ensure that inheritance or other separate gifts will be considered separate property and therefore not be included in the marital estate is to deposit separate funds into a separate account in your name alone.
Keep Funds in Separate Accounts During Separation
Afterwards continue to keep these funds separate and avoid co-mingling marital funds with your separate funds. Making any purchases for jointly titled assets with separate funds will very likely lead to a judge determining that you’re separate funds are no longer separate.
If you are facing a separation or divorce it is imperative that you seek the advice and guidance of an experienced north Carolina divorce lawyer. A good divorce attorney can explain to you the laws of equitable distribution and property division in North Carolina and how it affects your situation.