Money earned and assets purchased or received during a marriage are typically subject to equitable division in Tennessee. That’s because they are considered marital property, regardless of who earned or purchased them.

However, money and assets that are inherited aren’t subject to equitable division by default. That’s because they are considered separate property.

Inherited property being subject to equitable division is a common misconception among divorcing spouses, and it often leads to unnecessary strife and even disappointment during the divorce process.

If you or your spouse received inherited property and you’re either thinking about filing for divorce or are already in the process of getting divorced, the money or assets will likely stay with the person who received them except in a few unique (but relatively common) circumstances.

Here’s what you need to know about those circumstances.

The Inherited Money Was Available to and Used by Both Spouses

Commingled property is property that is available to and has been used by both spouses during a marriage. For example, a joint checking account that both spouses use to pay for living expenses and bills is considered commingled property, even if one spouse contributes to it exclusively or significantly more than the other spouse.

This also applies to inherited money. For example, if a spouse receives an inherited cash windfall and the money is placed into a joint checking account that is used by both spouses, the money is considered commingled property. It’s viewed in the eyes of a divorce court the same way that money earned from a spouse’s job that’s used by both spouses is viewed, and it’s subject to equitable division during divorce.

In order for inherited money to remain separate property during divorce, the spouse who inherits it should keep it in a separate account that their spouse doesn’t have access to AND abstain from spending it on joint property.

If that’s not an option, the spouse who received the inheritance should keep meticulous records of how the money is used by retaining bank statements, receipts, etc., to prove their intent to keep the money as separate property.

The Inherited Asset Grew in Value Because of the Other Spouse’s Work

Another way that an inherited asset, whether it’s property or money, can be considered commingled, and thus marital property, is if the spouse of the person who inherited it helped it grow in value.

For example, if a person inherits $50,000 in cash from a deceased relative, and their spouse gives them investment advice or handles the investment directly and the money grows, the money may be considered commingled and subject to equitable division.

This can also happen with an inherited house. If the spouse of the person who inherited the house takes an active and hands-on role in updating and renovating it, whether by performing work directly or by overseeing it, and the house appreciates primarily due to those improvements, it also may be considered commingled and subject to equitable division.

It’s Possible to Reverse Commingling with Evidence and Documentation

Commingling is typically permanent, but not always. Sometimes, assets can become temporarily or even accidentally commingled—oftentimes without the inheriting spouse’s knowledge or consent. If this happens, it’s possible to reverse the process in the eyes of a divorce court by providing documentation showing the commingling happened by mistake or without consent.

For example, if a person makes significant repairs and renovations to a home their spouse inherited, and those repairs and renovations were against the inheriting spouse’s wishes, they may be able to reverse the commingling of the property.

We Can Help You Obtain or Retain Inherited Money and Assets During Divorce

The status of inherited money and assets can be difficult to prove, especially if the marriage lasted a long time and the inheritance was received many years ago.

It’s easy for a divorcing spouse to claim their stake in money that was never theirs and that they never had access to or benefited from. It’s also easy for the reverse to occur and for a divorcing spouse to claim their partner has no right to their inherited assets, even after they managed them, grew them, or spent them on bills and cost of living expenses.

At Ralls & Wooten, our Maryville family law attorneys simply get to work establishing the facts of commingled property during divorce. We can quickly and accurately determine whether it should be considered marital or separate property, and we work hard to protect our clients’ rights to the property they received or used during their marriages.

If you need assistance with a divorce-related matter, including inherited property, money, or assets, contact us today for a free consultation.