How Is Inheritance Treated In An Alabama Divorce?
Alabama is an equitable distribution state, which means that marital assets will be divided in a way that is determined to be fair and equitable by the court. This may or may not result in a roughly equal division, depending on the circumstances. The first step to dividing property is determining whether existing assets as marital property or separate property. Marital property, with some exceptions, generally includes any assets or debts accumulated during the course of the marriage. Separate property is property that belonged to a spouse prior to entering a marriage, or that does not fall under the umbrella or marital property. This distinction is critical because only marital property is divided during a divorce. Separate property is not affected and remains with the spouse that owns it. So where does inheritance fall? It depends.
Determining Whether Inheritance is Marital or Separate Property
The general rule is that inheritance left to just one spouse is treated as separate property. However, there are, of course, exceptions. For instance, if the inheritance was left to an individual and their spouse, then it will be considered marital property. Additionally, even if an inheritance was left to just one spouse, it can become marital property if it is treated that way. For instance, if the inheritance is deposited into a joint-account that is shared with the other spouse, or used for things related to the marriage, such as home renovations, or starting a joint business venture, this may transform the inheritance into marital property, and would result in it being divided along with other marital assets in a divorce. Another thing to keep in mind is whether any prenuptial or postnuptial agreements govern the status of the inheritance. Many families insist on prenuptial agreements that protect the inheritance against divorce when they plan on leaving a large sum of assets to their child. Additionally, if one spouse learns after getting married that they will be receiving an inheritance, they may create a postnuptial agreement ensuring that the inheritance remains their separate property. In the existence that an agreement like this exists, its terms will likely govern.
If inheritance was received prior to a marriage, was kept in a separate account, and was treated as separate property, absent any evidence of commingling of funds, this inheritance will continue to be treated as separate property and will not be subject to division in a divorce.
Talk to an Alabama Divorce Attorney
If you are considering or are currently going through a divorce and are concerned about how it will affect your inheritance, it is best to talk to an attorney as soon as possible. Additionally, if you have recently learned that you will be receiving an inheritance, talking to an attorney now can allow you to put the proper protections in place. Regardless of your needs, the experienced Birmingham divorce attorneys at Peeples Law are ready to help. Contact Peeples Law today to schedule a consultation and find out how we can help you.