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Inheritances & Gifts: Keeping What’s Yours

It is never easy to lose a loved one. But in cases where the passage of a parent or grandparent involves an inheritance, the financial benefit left behind can help ease the transition for grieving family members as they handle the challenges of picking up the pieces.

When it comes to divorce, however, ugly separation proceedings can pile on top of an already difficult situation with the loss of a dear family member. In the case of an inheritance or estate, it’s important to know how to protect yourself and your family from the legal turmoil that can accompany a financial separation.

Key Background Information

Before we talk about how to protect your inheritance from an ex-spouse, it’s important to take note of some key concepts regarding your assets. In general, there are two types of assets to be handled in any divorce case: separate property and marital property. Separate property, in most cases, includes the following:

  • Property owned or obtained by either spouse either before marriage or after the legally recorded date of separation
  • Inheritances received by a single spouse
  • Gifts to a single spouse from a third party
  • Settlements for pain or suffering from personal injury lawsuits
  • Any property otherwise identified in a pre- or post-nuptial agreement

Everything else is typically considered marital property, and is subject to distribution under the laws of the state in which the divorce takes place.


So if inheritances are considered separate property, you may be wondering how they can be threatened in divorce proceedings. If an inheritance is received and deposited into a bank account solely owned by the recipient, that money is typically protected during divorce proceedings.

However, if the funds are deposited into a jointly-owned bank account, or used toward a joint purchase, the result is that the funds could be considered marital property. As a result, the inheritance will likely be subject to division just like everything else.


Just like an inheritance, a gift from a third party – family or friends – is typically considered separate property and wouldn’t be subject to distribution during divorce proceedings. That said, the same concept about co-mingling the funds applies. If the gift was a loan, for example, to make a down payment on a house that is jointly owned, then that money could very well be considered as marital property. In that case, it would be up for the divorce lawyers on each side to make a case for whether and how it should be divided.

In short, the easiest way to protect your inheritances and gifts is to keep them in a separate bank account that solely belongs to you. You can still use these funds at your discretion, but know that making joint purchases or co-mingling the money with your other assets may lead to your inheritance or gift being viewed as marital property, and thus subject to division.

About the Author

Richard Austin
Richard Austin