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Keeping your inheritance in a divorce settlement

On Behalf of | Nov 17, 2021 | Blog, Property Division

If you inherited property from a loved one, you might worry about losing it if you divorce. According to the Tennessee Board of Law Examiners, Tennessee is an equitable distribution state. As a result, the court divides marital property equitably but not necessarily equally.

Determining which is marital property and which is separate is often challenging. This is especially true if you commingle assets that include an inheritance.

What qualifies as separate property?

Generally speaking, if you owned property before your union, it does not become marital property. If you obtained income from such property, it also remains separate. Any compensation received as damages in a crime and property acquired as a gift or inheritance also remain separate.

However, if your actions convert separate property into marital property, it often becomes part of the settlement considerations.

What determines commingled property?

Commingling of property occurs when you mix it together in a way that you cannot separate it later. For example, suppose you deposited money from a loved one’s estate into a family account. Once in that account, you paid marital expenses. If the court cannot trace your inheritance, identifying it as such, it becomes marital property. The court may determine it is subject to division in your divorce settlement.

When it comes to keeping inherited property separate, you may have several options. You might place your inheritance in its own account, invest it apart from other assets and address it in a postnuptial agreement. The division of assets often causes contention during divorce proceedings. Understanding your options can help ensure you receive an appropriate settlement without losing your inheritance.