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How are inheritances treated during the asset division process?

While it is never easy to lose a loved one, sometimes following a loved one's death a person is fortunate enough to receive a significant inheritance. However, what happens if a person in Colorado receives an inheritance while married, but later divorces? How is the inheritance treated when it comes to asset division in a divorce?

First, it is important to understand the difference between marital property and separate property. Marital property is that which a spouse obtains while married. In general, each spouse has an ownership interest in marital property, and thus it is subject to division between the spouses in the event of a divorce. Separate property is that which is owned prior to marriage. Unless it has commingled with marital property, the spouse that owned the property prior to their marriage will retain that property in the event of a divorce.

However, there are always exceptions to the rules, and when it comes to asset division, inheritances are one of them. In general, an inheritance will be considered separate property, even if the person obtained it while married. Thus, the spouse who received the inheritance will keep it post-divorce. That being said, if the inheritance is commingled with marital assets, it may lose its separate nature. For example, if an inheritance is placed into a joint bank account, and then used to purchase or make improvements to marital property, then the inheritance may be considered part of the divisible estate.

So, if a person wishes to ensure that their inheritance will be considered separate property in the event of a divorce, they should take care not to place it in a marital bank account or use it for marital expenses. Of course, oftentimes a person who receives an inheritance doesn't expect to divorce. Unfortunately, divorces do happen, making inheritances a potentially complex asset when it comes to property division. In such situations, seeking legal guidance can help a person understand more about how their inheritance will be treated when it comes to the division of assets.

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Law Office of Lori Crystal, LLC

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