Many of my clients ask me if the money they have inherited during a marriage is “off the table” in a divorce. This can be a complicated question, and I often reply, “It depends.”
The general rule in Oregon is that inherited or gifted assets to one spouse during a marriage are not subject to the presumption of equal contribution by the other spouse in a divorce. The exception to this general rule is if a judge determines it would be “just and proper under all the circumstances” to put it back on the table, then it may be divided between the spouses in a divorce.
Let’s break this down with some examples. If Spouse A inherits $100,000 and deposits the funds in an individual account only in Spouse A’s name, then these funds will, in most cases, be considered the separate property of Spouse A in a divorce from Spouse B. Meaning, they remain “off the table.” However, I said, “It depends.” In other cases, for example, where Spouse A transfers the funds to an account held with Spouse B, then those jointly held funds have now become marital assets and subject to a 50/50 division in a future divorce. Another example is where Spouse A takes the $100,000 and purchases a home with Spouse B where both are on title. Spouse A has now effectively commingled her $100,000 down payment with Spouse B. If the parties divorce in the future, then Spouse B is likely going to be entitled to 50% of the home equity including the benefit of any equity created by Spouse A’s $100,000 down payment. It is difficult to anticipate under which set of circumstances a judge might award Spouse B a share of Spouse A’s inheritance if Spouse A kept it separately from Spouse B continuously throughout the marriage.
Each case is decided on its particular facts. The moral of this story is you should never commingle any inheritance you may receive during a marriage without understanding the legal impact of such a decision. Keep it separate until you can consult with an attorney who can advise you before making costly mistakes you may not be able to reverse.
