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What Happens to Your Inheritance When You Divorce?

During the course of your marriage, you may have suffered the loss of a parent or other family member and received an inheritance. Under Michigan law, an inheritance is normally considered the individual property of the spouse whose relative died. This is an exception to the general rule that any asset acquired by either spouse during a marriage is marital property and subject to equitable distribution upon divorce.

However, there are several situations in which your inheritance nevertheless may be treated as marital property. Here are the most common ones:

  • Joint inheritance — Both you and your spouse may have been designated as beneficiaries in the will, trust, insurance policy or other form of property transfer. That would clearly indicate that the person leaving the property intended for both of you to share in it.
  • Commingling and transmutation — Even if the property was left to you alone, you and your spouse may have mixed it with other assets or used it for common purposes. When the inheritance is placed in a joint bank account or is used to purchase or improve co-owned property, it may change from separate to marital property.
  • Retirement planning — The investment may have been used to fund jointly held retirement investments. A court might find it unfair to deny your spouse access to funds that both of you reasonably believed would be part of your available resources later in life.

The court also may treat your inheritance as marital property if the total of other assets deemed marital property is insufficient to support one of you. Especially in the case of a long marriage, the court seeks to avoid leaving one spouse destitute.

If you have received or are expecting an inheritance, an experienced attorney can explain how equitable distribution law applies to your situation and can advise you of the steps you can take to help keep your inheritance from being divided in case of divorce.

Dawson Family Law, PLCC has wide experience dealing with legal issues involving divorce and inheritance in Michigan. Call me at 833-671-4445 or contact me online to set up a free consultation at my Sterling Heights office.

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