As a general rule, assets that someone inherits during a marriage are deemed separate property. The beneficiary of the inheritance owns the assets outright, separate and distinct from the other spouse in the marriage. Therefore an inheritance may (key word) not be part of your marital estate. Yet it all depends how you handle the funds upon receipt (and there are exceptions to this rule too). Read on to learn more.

When you look at an inheritance, you have to look at its attributes and how those attributes change over time. If you receive an inheritance and keep it in your own name then it is very clear the inheritance is owned by you. Yet, if you commingle the inheritance with other funds or other properties, then the inheritance may no longer be deemed solely owned by you. Why?

By combining your inheritance with other properties (e.g. an investment account), then you have inadvertently changed the attributes of that inheritance so it becomes “marital property” and part of your marital estate. If you accidentally combined the funds, you “may” be subject to a high bar to prove the inheritance was never meant to be shared with your spouse.

Examples of commingling funds may arise as follows:

  • Putting the inheritance into a joint checking account
  • Investing the inheritance into a joint piece of property
  • Investing the funds into a joint brokerage account
  • Using the funds for joint means

You’ll notice I used the word “may” above. What does this mean? It means every divorce is truly a negotiation. If you know how to negotiate this accidental event of commingling the funds then you can manage your financial outcomes. In other words if you made the mistake to commingle the funds it is about being able to figure out how to either remove it from your marital estate or use other tradable components to negotiate it away. There are many negotiating techniques that can be put to use yet they are beyond the scope of this article.

If you want to keep the inheritance separate to maintain its “separate property” attributes you can, for example:

  • Keep the inheritance in your name only
  • Place the inheritance in a trust to protect it from the marital estate

If you are subject to an inheritance be careful to maintain the attributes that come with the inheritance while you are married so you are not subject to unexpected financial outcomes if you decide to get a divorce.

About the Author

Larry Smith is a Founding Partner of Divorce Outcomes, a specialized professional services firm that manages all of the financial aspects in a divorce process. Since 2003 he has worked as a trusted financial advisor, financial advocate, divorce architect and technical financial expert; he is not an attorney. He is an alumni of KPMG and Andersen with expertise in technical accounting, forensics, sophisticated taxation, management consulting, risk management, advanced process engineering, business combinations, divorce management, multi-party negotiations, advanced quality analytics and cognitive performance technologies. Since 1986 Larry has been advising individuals and organizations about innovative financial solutions to resolve complex financial challenges that arise in life and in business.

For both personal and business divorces, Larry is considered an expert in divorce strategies, divorce process management, financial divorce architecture, financial risk management, taxation for divorces, financial divorce forensics, advanced divorce analytics, financial divorce negotiations and mediation, business valuations and sophisticated equity structures. He helps clients shape complex financial decisions, manage communication risks and ever-changing negotiating positions to strategically preserve or grow wealth from these types of transactions.

If You Have a Question

If you have a question, feel free to contact me at [email protected] or 617-680-5222. The call is free. I will spend 30–60 minutes with you. I will provide you an honest assessment as to where I think you are positioned in your divorce process or answer any questions you have. I may provide you some guidance, insight or advice that you can take with you as you wish. There is no obligation to move forward. The phone call is designed to ease your fears, provide you some options to pursue and a potential road to run on that can lead you down a path to achieve a successful outcome.

About Divorce Outcomes

Divorce Outcomes is a specialty services firm that helps people both domestically and internationally manage all of the financial decisions that arise in their divorce process. We are not attorneys. We are financial experts who partner with our clients as their personal financial advocates. We help our clients manage their divorce process, uncover hidden financial risks, architect divorce solutions, manage ever-changing negotiating positions, communicate complex financial matters and close the divorce process as soon as possible with a goal to arrive at the best outcomes possible. Throughout the process we evaluate the current state of our clients’ financial lives with an objective to best reposition their future. We do not sell any products. We simply raise issues that are in our clients best interest. Our clients share with us we:

  • unfold, analyze and repackage their financial life so they are well positioned after their divorce 
  • preserve the value of their business or marital estate
  • continuously strive to provide a return on our services
  • build balanced financial solutions grounded in evidence
  • find ways to make our client, and at times both parties, money through the process
  • design their divorce to work for them and their family’s life
  • provide mental clarity to make decisions
  • reduce the total process time from start to close
  • minimize the stress and unpleasant memories that can last a lifetime

As we reach an agreed upon settlement structure, we help our clients identify a fitting attorney who can leverage the financial solution to draft and record the requisite legal documents. Where outcomes are at risk from a traditional process, we function as expert financial negotiators or financial mediators to turn around the situation and achieve our client’s desired outcomes.

Learn more about us at or review our blogs to gain a clearer understanding about our approach and how we maximize the financial outcomes for our clients.


This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute formal advice or a recommended course of action as every person’s situation is unique and different. The information here is not intended to be, and should not be, relied upon by the recipient to make a decision without professional guidance.

Pin It on Pinterest

Share This