It is often assumed that an inheritance belongs only to the spouse that inherited that asset. But under certain circumstances, one spouse’s inheritance can become community property, subject to New York’s equitable distribution laws during a divorce.
Doesn’t New York protect separate property?
In New York, the equitable distribution law only requires the division of marital property during a divorce. Marital property includes any property, income and assets acquired during the marriage, no matter who earned them. This rule excludes separate property and property acquired before marriage.
Separate property includes inheritances received during the marriage, so dividing an inheritance is not required provided that asset remains separate.
How does an inheritance become community property?
If you commingle an inheritance with marital assets, the inheritance becomes marital property. This includes depositing an inheritance into a joint bank account or using those funds to purchase marital property.
How do I preserve an inheritance as separate property?
In order to establish separate property, you must keep your marital assets separate from your inheritance. Do not deposit inherited funds into joint accounts; do not use inherited funds to pay for joint assets, such as your mortgage; do not pay marital debts with your inheritance.
How can I protect my inheritance in the event of a divorce?
You can protect yourself in case of divorce with a prenuptial or postnuptial agreement. You can also maintain a separate account for your inherited funds, and keep careful records of all transactions to verify that your inheritance is a separate property from your community property.
Taking care to keep your inheritance separate from your marital assets can ensure your inheritance is not divided under New York’s equitable distribution laws.