In Texas, the treatment of inherited property in a divorce can be complex. While inheritances are generally separate property, there are situations where they can become marital assets.
This means both spouses, not just one, may have a claim to the property and that it is subject to division in a divorce.
Commingling funds
Commingling occurs when people mix separate property with marital funds or use it to acquire joint assets. This can happen in various ways, such as depositing inheritance funds into a joint bank account, using them to purchase a family home or investing them in a shared business venture.
Separate property can lose its distinct identity in these cases. It may then become part of the marital estate. In the eyes of the law, this mingling transforms the inheritance into a marital asset, subject to division upon divorce.
For instance, if a spouse inherits a sum of money and deposits it into a joint bank account, the funds become indistinguishable from marital income. Similarly, if inherited funds go toward mortgage payments on a marital home, the home’s value may be marital rather than separate. In San Antonio, the median value of a home is $198,000.
Tracing
Tracing is the process of identifying and segregating separate property from marital assets. In cases of commingling, tracing can be challenging but not impossible. To establish the separate nature of inherited property, detailed records and documentation are necessary.
Bank statements, deeds and receipts can be helpful. Additionally, documenting the source of funds and their subsequent use can strengthen any claims that an inheritance remained separate.
Taking proactive steps to preserve the separate nature of inherited assets is important for people who want to protect their inheritance in the event of divorce.