Commingling of Assets and Its Effect on an Inheritance

North Carolina law typically forbids dividing an individual’s inheritance between spouses during divorce. It doesn’t matter if the inheritance is cash, a house, stocks – an inheritance is that person’s separate property. Further, this counts whether the spouse received the bequest before or after the marriage.

Although this is the general rule when it comes to property division, some clients may find out too late  that it might not always end up that way during a divorce. In some cases, a spouse may need assistance in asserting their claim on an inheritance or gift, due to the fact that their assets became mixed up with their spouse’s. This can happen in cases of long-term or second marriages.

For an inheritance to remain separate and not joint property during a divorce, it must be kept separated from household expenses. When the assets of spouses become entangled, it is called “commingling of assets.”

Commingling of assets in NC

If you receive an inheritance from a family member, of course you are free to use it in any way you choose. You may want to purchase a home, pay off student loans, your child’s college education, or a countless number of things. However, there are a few things you should keep in mind, especially if you want to keep some of it for yourself in the event your marriage ends.

A spouse can invalidate their inheritance in North Carolina, even if it was pre-marital separate property, by commingling assets. What this means is mixing your gifted property with your spouse’s property. For example, your great-aunt Agnes dies and leaves you her valuable collection of antique teapots. You sell them to a collector and make a great deal of money. If you take that check and deposit all of it into your and your spouse’s joint bank account, it loses its separate property designation and becomes marital property in the eyes of the court.

How do I protect my inheritance?

You have a few options for keeping your inheritance as separate property. If you received your gift or bequest and are not yet married, consider a premarital agreement with your future spouse. If you receive an inheritance during the course of your marriage, you can also have an attorney write up a postmarital agreement.

Other ways to protect your inherited assets include:

• Don’t deposit inherited funds into joint accounts
• Don’t deposit marital funds into an account dedicated to an inheritance fund
• Don’t use inherited or gifted assets to purchase, maintain or make improvements on a marital home or property

Additionally, ensure you document receipt of any gifts or assets you receive through a bequest, along with details. These will be important in the event of any future dispute.

If you or your spouse receive an inheritance during the course of your marriage, it is important to talk to a qualified family law attorney to ensure proper protection for everyone.

The qualified lawyers at Epperson Law Group, PLLC are pleased to represent clients across the state with a variety of divorce and estate planning matters. Call us in Charlotte, Boone, Concord, or Weddington at 704-321-0031, or visit our contact page, and schedule your consultation.