Raleigh Divorce Law Firm
Get help resolving family law issues now. Call for a consultation:

PLEASE NOTE: Our office is open for business as usual but in these unprecedented times, the team at Raleigh Divorce Law Firm is taking proactive steps to protect our team, clients and colleagues as well as do our part to help slow the spread of COVID-19. We have taken measures to limit the number of people physically in the office and have been working with clients to handle meetings by phone and utilize other technological methods to communicate when necessary. Our office location does not share space with any other businesses so there is a limited amount of traffic in and out of the office. We sanitize our conference rooms after each use so they are clean and ready for the next client.

There are currently courthouse policies state-wide that involve the postponing of trial dates within the next thirty days and we are working diligently to make sure our existing clients are notified about this and to reschedule any affected court dates. We continue to remain committed to providing quality legal services. Our phone and computer systems have the ability to operate remotely, should that become necessary at any point in the future. Additionally, we utilize a secure network and have an IT team dedicated to protecting our client’s privacy and security while allowing our attorneys, paralegals, and staff the opportunity to work from home if needed.

If you are a current client of the firm or a prospective client, please be assured that we continue to have the ability to effectively represent you. Please feel free to call or email us anytime, and we will continue to be available to serve your needs.

What happens to inheritance money in a divorce?

Property division can turn into one of the most contested parts of a divorce next to child custody. That's because, like child custody disputes, matters concerning marital assets are often emotionally charged, a fact that can make legal matters difficult to resolve amicably without help from an attorney. However, there are other factors that can make property division a particularly challenging legal process, including the complexity of the asset, how difficult it is to value the asset, whether the asset is partly the separate property of one spouse, and whether an asset has both marital and separate components that have appreciated or depreciated over time.

Take for example inheritance money. Do you know how it is divided in divorce? If you're like most people, probably not, and that's okay. Determining how or if to divide inheritance money can turn into a complex issue for some. In order to resolve matters, there are some things that need to be considered first.

Separate vs. marital property

In order to determine how an inheritance would be addressed in property division, we must first look at property division laws in North Carolina, which are governed by N.C.G.S § 50-20.

This section states that in the event of divorce, property shall first be divided into two categories: separate property and marital property. Anything acquired prior to the start of a marriage is considered separate property and is not subject to equitable distribution. Any property acquired during the course of marriage, however, is considered marital property.

Separate property, naturally, is given to the applicable spouse while marital property is divided in an equitable manner.

How is an inheritance classified?

This is where things get tricky for people who have received an inheritance.

If an inheritance is received prior to the start of marriage, it is considered separate property provided the money stays separate throughout the course of marriage. If it becomes co-mingled - which can happen if the inheritance is placed in a separate savings account that is later combined with a joint savings account - the inheritance becomes marital property that is then subject to equitable distribution, unless the spouse who received it can "trace" the funds. This can be easy with accounts that still have a balance greater than the amount of separate property that was deposited, but can be more difficult in cases where most or all of the deposited funds were spent during the marriage. In those cases, funds that have already been spent cannot be "unspent" and allocated back to the spouse who originally received them. Additionally, under North Carolina law if separate funds (such as inheritance) are contributed to jointly titled real property, then there is a presumption that those funds were a gift to the marital estate. For example, if a spouse received an inheritance but then used those funds as a down payment for the marital home which was titled in both spouses names, this is presumed a "gift" to the marriage and the equity in the home, including the portion attributable to the down payment, is considered marital. The spouse who received the funds then has the burden to rebut the presumption that the funds are marital and prove they are separate.

If an inheritance is received during the course of marriage, a judge will need to look at a number of things including, but not limited to: if only one spouse was named as the beneficiary of the inheritance in the will, whether or not the inheritance was held in an account separate from marital funds, whether or not the inheritance was used to purchase marital assets, if the inheritance money ever co-mingled with marital assets, and if so, what type of asset it was co-mingled with.

Getting help from someone who understands the law

Because no one ever plans on getting a divorce, the co-mingling of inheritance money with marital assets is a very real problem for a lot of people. Most people only have a vague understanding of the law, which is not enough to properly evaluate whether inheritance money remains separate from marital assets, or know how to equitably divide it. That's why, in these cases, in order to avoid contentious disputes, it may be necessary to consult with an attorney who has experience in these matters.

No Comments

Leave a comment
Comment Information

Schedule A Consult

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Email Us For A Response

8341 Bandford Way, Suite 1
Raleigh, NC 27615

Phone: 919-256-3970
Fax: 919-256-3971
Raleigh Law Office Map