Is your inheritance at stake in your divorce?
While community property states require the equal division of marital property during divorce, New Jersey law holds that shared property must be divided under the principle of equitable distribution. When a divorcing couple is unable to reach a property settlement outside of court, whether by direct negotiations, mediated negotiations, lawyer to lawyer contacts, or collaborative divorce, a trial judge will step in to divide property.
Not all property is marital property, and only marital property is subject to equitable distribution. In general, marital property is that which is acquired during the marriage, but there are exceptions. For example, gifts and bequests are typically considered the separate property of the spouse who acquired them, but there are even exceptions here.
For example, if you receive an inheritance in your name alone, and you keep that asset without sharing it with your spouse, this is likely to be considered your separate property in the event of divorce. If, however, you share your inheritance with your spouse–perhaps by using separate property to buy a house in joint names or putting it in a bank account with both of your names–this may be considered a marital asset upon divorce.
Assets such as inheritances and gifts typically only remain the separate property of the spouse whose name is attached to them if the assets are not commingled, pooled or shared.
Divorcing spouses often do not agree about whether gifts or inheritances are part of the marital estate. When disputes occur, a court may consider the date of acquisition, the title to the asset, and whether it has been commingled, among other factors.
Property division can be a very complicated and contentious part of the divorce process. It is vital for New Jersey residents to obtain legal advice and representation by a Supreme Court Certified Family Law Specialist to protect their financial rights and interests.
Source: The Star-Ledger, “Your Money: Protecting adult child’s inheritance from ugly divorce fight and poor money decisions,” Karin Price, May 12, 2014