Will my husband’s inheritance count as an asset when we divorce?

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Q. I was married 20 years ago and now I’m getting a divorce. My husband received an inheritance about five years ago and he takes required distributions from it every year. Is it true that those payments can be considered as part of equitable distribution?
— Curious

A. We’re sorry to hear about your divorce.

It’s important to understand how an inheritance is considered when property is divided in a divorce.

New Jersey is an equitable distribution state, which means that marital property is to be divided in an equitable or fair manner between spouses at the time of divorce, said Thomas Roberto, a family law attorney with Adinolfi, Lieberman, Burick, Roberto & Molotsky in Mount Laurel.

He said property acquired during the marriage is generally considered to be marital in nature and therefore subject to equitable distribution. There are, however, exceptions to this, including but not limited to cases where one spouse receives property during the marriage in the form of an inheritance.

“Property inherited by one spouse is generally considered exempt from equitable distribution at the time of divorce, provided the property was not commingled — mixed with marital property — during the marriage,” Roberto said.

If one spouse receives an inheritance during the marriage and proceeds to commingle the inherited funds with marital funds, such as depositing the inherited funds into a joint bank account, that would potentially justify rendering the inheritance subject to equitable distribution in the event of divorce, he said. The concept of commingling is fact-specific, and depends upon the factual details of each case.

Even if the inherited funds were not commingled, there may still be a basis to include those funds as income to the receiving spouse for purposes of alimony and/or child support, Roberto said.

“If the inherited funds were not commingled but were used to fund the marital lifestyle — if the receiving spouse kept the inherited funds in an account titled in his or her individual name but paid marital expenses from that individual account — that would potentially be sufficient to justify a conclusion that the receiving spouse should pay support based on the inherited funds received,” he said.

This would be in addition to his or her income, and any other applicable factors relevant to a supporting spouse’s ability to pay, he said.

New Jersey law makes clear that both spouses have a right to maintain the marital lifestyle, or a reasonable approximation of that lifestyle, upon divorce, he said.

“It stands to reason that if inherited funds were used by one spouse to fund the marital lifestyle, and those funds will only be available to the receiving spouse post-divorce — meaning, not subject to equitable distribution — the other spouse would not have the ability to live a reasonably comparable lifestyle unless the inherited funds are factored into the support calculus, Roberto said.

You should speak to an experienced divorce attorney who can advise based on the specifics of your case.

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This story was originally published on Aug. 25, 2022.

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