By David L. Duff of Duff & Kronfeld, P.C. posted in Family Law on Friday, October 27, 2017.
Divorce in Virginia is governed by “Equitable Distribution,” which requires that a Judge first determine which of the parties’ various assets and property rights are “marital” in nature. Then, the Judge decides the fair, or equitable, manner of dividing those assets/property rights, based upon various statutory factors.
However, a Judge can only divide assets that are, indeed, “marital,” i.e., were acquired during the marriage and before separation. The Judge cannot touch “separate” property; therefore, in any divorce situation, it is always important to decide what asset may fall into the category of “separate property.”
One of the most common categories of separate property is an inheritance. If one spouse receives an inheritance during the marriage, regardless of whether it is cash, stock or an interest in real estate, it is classified as being that spouse’s “separate” property, and the other spouse has absolutely no legal interest in the same. In other words, an inheritance does not get addressed by the Judge in equitable distribution of marital property, because, quite obviously, it is not marital property.
There is one very important proviso, however, namely, that the inheritance remains a spouse’s separate property UNLESS he/she does something with the inherited property to make it “marital.” This could be done by depositing inherited cash into a bank account that is jointly-titled with the other spouse; or, re-titling the account holding the inherited cash, from the recipient-spouse’s sole name, into the joint names of both parties.
The same holds true with the titling of investment stock that is received as an inheritance. So long as the brokerage account, or stock certificate, remains in the recipient-spouse’s individual name, that inheritance is his/her separate property. Once it gets put into the joint names of both spouses, the inheritance loses its nature as separate property; becomes “marital” property; and, is susceptible to equitable distribution by the divorce Judge.
With inherited real estate, this legal transformation from separate property to marital occurs most often when the recipient-spouse decides to put the other spouse’s name “on the Deed.” While such act is no doubt done with the absolute best intentions, its consequences upon a divorce are often both unintended and financially disastrous to the recipient spouse.
If you find yourself in a divorce situation where an inheritance is involved, contact one of the attorneys at Duff Kronfeld & Marquardt P.C. for a complimentary, 30-minute telephone consultation regarding your rights and options.