Can I Keep My Inheritance In A Divorce?

In New Jersey, when a couple files for divorce, the assets they jointly own are generally subject to division during a divorce. However, separate property will remain the sole property of the party that owns it. As such, an inheritance is generally considered separate property and not subject to division during a divorce. It is important to understand, however, that mixing inherited assets can result in your inheritance being at risk. In New Jersey, inheritance is considered separate property in accordance with equitable distribution laws (N.J.S.A 2A:34-23), unless it is commingled or otherwise considered marital property. As such, understanding when inheritance remains protected and when it may be divided is essential to safeguarding your assets during divorce proceedings. Our Morristown divorce attorneys want to help you avoid these pitfalls.

Is an Inheritance Separate Property in New Jersey?

Simply put, yes. If someone leaves you something and does not mention your spouse, then it is a gift for you and only you. Even when the rest of your property is being equitably distributed during the divorce process, your spouse should not have access to your inheritance.

It is a different story if someone leaves something to both of you. If you are both explicitly named in a will or put on the deed to a piece of property, that is going to be considered shared property. So to sum up, if your father passes away and leaves you a house and $200,000, that is yours. If your father passes away and leaves you and your spouse the house and the money, it is not going to be considered your separate property.

What Counts as Separate vs. Marital Property in New Jersey

Separate property: Assets owned prior to the marriage or received individually through inheritance or gifting
Marital property: Assets acquired during the marriage through joint efforts
Joint inheritance: Property left to both spouses constitutes marital property
Key distinction: Courts consider how the asset was obtained and if it was kept separate

Is New Jersey an Equitable Distribution State?

Yes, New Jersey adheres to the equitable distribution process. This means that marital assets will be divided according to the contribution of each spouse, including domestic and financial contributions. The courts will also consider factors like the length of the marriage and the financial needs of each party at the time of the divorce.

Factors Courts Consider in Equitable Distribution

Length of marriage and standard of living established
Income and earning capacity of each spouse
Contributions to the marriage, including homemaking and child care
Each party’s economic circumstances at the time of the divorce
Any written agreements, including prenuptial and postnuptial contracts

When Can an Inheritance Be Subject to Division in a Morris County Divorce?

Even if something is only left to you, there are situations where a spouse can try to make a claim to your inheritance during a divorce. This is why understanding what actions can put your inheritance at risk during a divorce is critical, as it can help you avoid circumstances that can convert your inheritance to marital property in New Jersey.

Common Mistakes That Can Put Your Inheritance At Risk

Commingling: This is a common mistake and a costly one. If you inherit money and place it in a joint account that you share with your spouse, this is considered commingling.
Conversion: Putting your spouse on the deed or title of an inherited property can turn it into joint property. If you divorce and their name is on an inherited asset, they can try to grab their share of it.
Using inheritance for marital expenses: Using your inheritance to pay for marital expenses, like joint debts, a mortgage, or purchasing a jointly owned vehicle, can turn the purchase into marital property
Letting your spouse care for an inherited asset: Let’s say you inherit a beach house, but you never use it or really pay attention to it. Meanwhile, your spouse cares for the property, updates it, and increases its value. In a divorce, they can convincingly claim that they contributed to the asset and that they should receive a portion of its increased value.
Loss of traceability: Failing to maintain clear records and show the inheritance remained separate can result in it being deemed marital property.

Can an Increase in Value of an Inheritance Be Divided?

Even if the original asset remains separate property, if it has increased in value during the course of your marriage, the increase may be subject to division under certain circumstances. This is especially true if the non-owning spouse contributed to that increase, either financially or through effort. For example, if you inherit a vacation property, but your spouse helps maintain the property, the increase in value after the marriage may be subject to division.

When Appreciation Constitutes Marital Property

Active involvement by a spouse in improving or managing the assets
Use of marital funds to enhance the value of your inheritance
Shared efforts that directly help increase the value of the asset
Situation where value increases cannot be carefully separated from the marital contributions

How to Protect Your Inheritance During a New Jersey Divorce

If you receive an inheritance in New Jersey, understanding the steps you can take to protect the assets is critical. As such, this can help the inheritance remain separate property and protected from division.

Steps to Safeguard Your Inheritance

Keep inherited funds in a separate, individually owned account
Do not deposit inherited funds in a joint account
Do not add your spouse’s name to the title of the inherited property
Maintain a detailed record that can help trace the origins of the inheritance
Do not use the inheritance for marital assets

Talk to Our Morris County Divorce Attorneys

If you want to learn more about the property division process and how you can protect inherited property in Morristown, Parsippany, Denville, or any other community in or around Morris County, it’s in your best interest to reach out to Lazor Rantas, PC. We can stand up for your interests during negotiations and help you avoid mistakes that could put your assets up for grabs. Contact us today to discuss your circumstances with an experienced family law attorney.