POSTED BY: Kris Dunn
In Florida, if a spouse is the sole recipient of an inheritance in the form of money or property, either before or during the marriage, the inherited asset is nonmarital and not subject to the equitable division of property in a divorce. However, there are circumstances that can cause all or part of an inheritance to transition into a marital asset that is subject to division during a divorce.
NONMARITAL INHERITED FUNDS
A common issue in divorce arises when the owner of nonmarital money deposits the funds in the same bank account as marital funds. The nonmarital funds could have been directly inherited or, if an inheritance was in the form of real estate or personal property, if the owner sold the inherited property, the money received in the sale remains nonmarital since it was acquired in exchange for a nonmarital inheritance.
The question becomes whether in this situation, the spouse who separately owns the inherited money intends to share it as a gift to his or her spouse during the marriage. If so, the money becomes a marital asset and is therefore subject to division in divorce.
If the nonmarital, inherited money is kept in a separate account and no marital money is deposited there, it shows evidence of intention to keep the money nonmarital. However, if marital funds are also deposited there and marital and nonmarital money is comingled, Florida cases have held that this creates a presumption that the owner of the inheritance intended to gift half of the inherited funds to the other spouse.
At this point, the spouse who inherited the money has the burden to argue the presumption by showing evidence that he or she did not intend to gift half of the inheritance to the other spouse.
When an asset inherited by one spouse has its value enhanced because of the effort of either spouse during marriage, or because marital funds were spent to do so, the appreciation in value of the nonmarital asset becomes marital. This appreciation value, not the entire value, then becomes subject to equitable division in the case of a divorce.
For example, if marital funds such as wages earned during marriage are used to repair or improve an inherited building owned by one spouse, in divorce, the cour may find that the resulting increase in value to the building may be a marital asset subject to equitable division.
Similarly, if one spouse separately owns a piece of furniture that he or she inherited, but one of them during the marriage refinishes and/or repairs the item, increasing its value, the added value would become a marital asset.
Even if an inherited asset appears to have remained separate during the course of the marriage, nonmarital property can be a complex legal and factual issue in a Florida divorce. It is always in your best interest to speak to a lawyer with questions about inheritance and divorce. The earlier in the relationship a person seeks legal advice, the better. For example, the parties may decide to sign a prenuptial agreement before marriage in which they agree an inherited asset will remain nonmarital under any scenario.
As unfortunate as the circumstances may be, often times we find clients facing this exact problem. While your situation is always unique to your individual case, it is important to contact an experienced attorney regarding any legal questions that may transpire. Please do not hesitate to contact our law office of Dunn & Miller, P.A. today.