When Does An Inheritance Become Marital Property?

Asset Division Attorney

In Texas, inheritances are generally regarded as separate property under the state’s family law statutes. In general, separate property cannot be divided in a divorce.

According to the Texas Family Code, separate property includes anything one spouse owned before marriage or acquired during the marriage as a gift, through inheritance, or by personal injury settlement, with certain exceptions.

This definition aims to distinguish personal assets from those accrued jointly during the marriage, known as community property. However, distinguishing between separate and marital assets can become complicated if the inherited property is mixed with other funds or not kept separate from community property.

The critical factor in determining whether an inheritance remains separate property is how it was managed during the marriage. If inheritance funds are deposited into a joint bank account and used for ordinary marital expenses, such as paying mortgages or purchasing jointly-owned property, the inheritance will probably lose its separate status and become ‘commingled’ with community assets.

This commingling often makes it difficult to trace back or distinguish the source of funds, thus potentially reclassifying separate property as community property during a divorce. Similarly, if inherited real estate is improved using community funds or if both spouses contribute to its maintenance and mortgage payments, this property may also be considered marital or mixed-character property.

Protecting Inherited Assets In Texas

To safeguard an inheritance and ensure it remains separate property, it is advisable to keep it in a separate account and meticulously document any expenditures related to the inheritance. This financial prudence is supported by legal decisions that provide clear guidelines for separate asset management in marriage.

Moreover, spouses can enhance the protection of their inheritance by considering prenuptial or postnuptial agreements. These legal documents can precisely outline the handling of such assets in the event of marriage dissolution, providing an additional layer of protection.

Texas Family Code Chapter 3 and Chapter 7 provide the legal bases for these distinctions and the treatment of marital and separate properties. Specifically, the Code outlines that the appreciation of separate property remains separate unless community efforts or funds contribute to its increase in value. Therefore, understanding these provisions and planning accordingly can safeguard an individual’s inheritance from being divided during divorce proceedings.

For individuals who stand to inherit significant assets, it is of the utmost importance to maintain meticulous financial records and not mix. Additionally, the establishment of separate asset management arrangements could prove beneficial. Seeking advice from a financial advisor, in collaboration with a divorce attorney (even if divorce is not in the cards), can help devise strategies that align with both legal and financial objectives. These proactive steps are vital in ensuring that an inheritance remains protected and classified correctly as separate property—thereby avoiding unnecessary disputes and ensuring equitable asset distribution in the event of divorce.

Call Our Dallas Divorce Attorneys For Exceptional Legal Assistance

Are you facing challenges with asset division in Texas and seeking advice on your legal rights and responsibilities? At Orsinger, Nelson, Downing & Anderson, we are here to help. Our team of experienced legal professionals has a deep understanding of Texas marital property laws and is dedicated to crafting personalized and effective legal strategies for you.

Don’t navigate this complex process by yourself. Contact our asset division attorneys in Dallas at Orsinger, Nelson, Downing & Anderson by calling (214) 273-2400 to schedule a consultation. Let us represent your financial interests and well-being during this critical time.