Property Division Attorney in New York, New York
Inheritance as a Marital Asset?
Inheritance as a Marital Asset?
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The property that you’ve inherited you always want to make sure remains in your own name. If you have already put your spouse’s name on the deed, or on the title, or on the account, you’re not going to be able to just, by yourself remove that spouse’s name. It’s going to be a gift to the marriage.
The other piece that people oftentimes become concerned with is the income or dividends that spin off of the separate property asset. Let’s say you’ve taken the inheritance, you’ve kept it in your own name and yet the income that’s spinning off of the inheritance you’re depositing in a joint account. The money that you actually physically put in the joint account is marital property. You can’t take it back.
If you’ve been putting money into the marital account all along from separate property and then you suddenly decide to put that money into a separate property account, the money that is directly put into the separate property account, so long as it never touches the marital account, will remain separate property. The money that is put into the marital account will be marital property, with one exception.
If it’s traceable, and it by and large wasn’t used for day to day expenses – let’s say we’re looking at a down payment on a house. You buy a house for 1.5 million dollars and you’re going to take 500 thousand dollars out of your separate property and put it towards the down payment. In that instance, if you keep it traceable, that money will be recoverable – although not the appreciation on that money – but that money with be recoverable upon a divorce scenario.
If it’s not traceable, it’s presumed that it was a gift to the marriage and that you’re not going to be able to receive a credit for it. If we’re talking about a vacation home that you inherited and it remains titled to you as an individual but yet over the past 10 or 15 years it’s become used by the marriage and with the family, the property will remain separate property up to the point that it had been used by the family on some kind of regular basis and thus was deemed a gift to the family and a gift to the marriage.
The value of the vacation home up to the point where it became used by the family on a regular basis is your separate property. If, however, once you start looking at the property being used as a family vacation home, then it’s arguably marital.
The reason for that is, is that your spouse may very well be deemed to have cared for the home and looked after it and done the things that an ordinary homeowner would have done and therefore they are entitled to a piece of the appreciation. Generally half unless there are certain factors that could be taken into consideration that may alter that.
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New York, NY divorce attorney, Ken Jewell talks about how you would know if a property you inherited would be considered a marital asset. He points out that with inherited property, it is essential to ensure it remains in your own name. If a spouse’s name is already on the deed, title, or account, you cannot simply remove it without their consent, as doing so would likely be considered a gift to the marriage.
A common issue arises with the income or dividends generated by separate property. For instance, if the inheritance is kept in your own name but the income is deposited into a joint account, those funds in the joint account are considered marital property and cannot be reclaimed. Conversely, money deposited directly into a separate property account will generally remain separate, provided it never touches the marital account.
There is an exception for traceable funds used for specific purposes, such as a down payment on a house. If $500,000 from separate property is used toward a $1.5 million home purchase and is clearly traceable, that portion can be recovered in a divorce, although any appreciation on that money may not be. If funds are not traceable, they are presumed to be a gift to the marriage and are not recoverable.
He further notes that a vacation home inherited and titled in one spouse’s name remains separate property initially. However, if over the years the property is regularly used by the family, it may become considered a gift to the marriage. The value up to the point of family use is separate property, but any time after that—the period it is maintained and cared for by the spouse as a family home—can be considered marital property. In such cases, the spouse may be entitled to a share of the appreciation, generally half, unless other factors justify a different allocation.
