Inheritance - Separate or Commingled?

#1

My husband and I will be putting together a separation agreement to divide our assets etc. in advance of my relocating out of state.

Question is regarding an inheritance he received 2 years ago (we’ve been married for 20 years). We opened a joint investment account with $$ from his inheritance, but also some of these monies were used to: pay off credit cards, pay off truck loan, pay off travel trailer, cover our moving expenses to NC, purchase our new house in NC ($10,000-ish of this $$ was used) and inheritance $$ was put into joint savings, checking and money market accounts which were used to purchase items for the house i.e. furniture for the house, lawn tractor, tree service, gas grill, etc. Part of these funds were also used to make deposits into both of our Roth IRA accounts.

Is the money in our joint investment account something that can be divided, or is it his separate property? Aside from the house, this is the most significant of our assets. Or is it commingled at this point? As we want to try to divvy things up ourselves, just want to be sure I would be entitled to a portion of this money.

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#2

Generally inheritance money is the receiving spouse’s separate property.

Your husband would not be entitled to receive any of his inheritance money that was used for a marital purpose, i.e. paying off credit cards and other debt from the marriage, moving expenses, purchasing a home, buying furniture, etc.

Just because the remainder of the funds are in a joint account does not necessarily make the inheritance marital property. If the funds can be traced to show the balance of an account is from your husband’s inheritance, then the traceable amount is his separate property not subject to being divided. But if the funds cannot be traced (for example, they were put into a checking account and there has been consistent deposits and withdrawals over a period of time), then the funds will likely be marital and subject to being divided.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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