Can an Inheritance Be Considered Marital Property in Ohio?

Can an Inheritance Be Considered Marital Property in Ohio?

Getting an inheritance can be a blessing, but if you’re heading toward divorce, receiving one can raise concerns about losing some of it to property division. The short answer is that inheritances are generally considered separate property in Ohio, but certain circumstances can blur the distinctions, putting your inheritance at risk.

At Kvale Antonelli & Raj, we’ve seen many cases where inheritance was unintentionally treated as marital property due to a lack of careful planning. Understanding the nuances of Ohio law is key to protecting your assets. In this post, we will break down what you need to know about inheritance, marital property, and the steps you can take to safeguard what’s rightfully yours.

Understanding Separate Property in Ohio

Ohio law categorizes property into two distinct types during divorce proceedings: marital and separate. Marital property refers to any assets or income acquired during the marriage, such as jointly owned homes or shared bank accounts. These assets are typically subject to division in a divorce.

On the other hand, separate property includes assets acquired before the marriage or through specific means, such as gifts or inheritances received during the marriage. According to Ohio Revised Code 3105.171, an inheritance is considered separate property as long as it is kept distinct from marital assets.

The distinction is critical because separate property is not divided between spouses in a divorce. However, maintaining its separate nature requires careful handling, which brings us to the concept of commingling.

The Detriment of Commingling

One of the biggest reasons inheritances lose their status as separate property is commingling, which occurs when separate assets are mixed with marital assets. This is problematic because once separate assets are intertwined with marital ones, it becomes difficult, if not impossible, to differentiate them.

Here are some of the most common ways inheritance assets become commingled:

1. Paying Marital Expenses with Inheritance

Suppose you use inheritance funds to cover marital expenses, such as mortgage payments or household bills. Courts may consider those portions of your inheritance “contributed” to the marriage, making them marital property.

2. Using Marital Assets for Property Maintenance

Imagine inheriting a house and using joint marital income to pay for taxes or renovations. The increase in the home’s value due to those improvements might be classified as marital property, even if it was inherited.

3. Depositing Funds into a Joint Account

If you deposit inheritance money into a joint checking or savings account with your spouse, it becomes intertwined with marital funds. At that point, proving the inheritance’s separate nature becomes significantly more challenging.

Properly managing your inheritance from the outset can help you avoid commingling issues.

How Can You Protect Your Inheritance?

Thankfully, there are several steps you can take to maintain the separate nature of your inheritance and protect it from becoming marital property:

1. Consult an Attorney

Meet with a family law attorney before depositing, spending, or otherwise using your inheritance. Legal professionals can guide you on protecting your assets through estate planning, prenuptial agreements, or postnuptial agreements.

2. Keep It Separate

Open a separate bank account solely for your inheritance. Avoid depositing marital income or other funds into this account to prevent commingling.

3. Document Everything

Maintain detailed, organized records proving the origin of the inheritance and showing how it has been used. The clearer your documentation, the easier it is to trace the funds if needed.

4. Be Cautious with Property Upkeep

If you inherit real estate, ensure that any maintenance, repairs, or taxes are paid exclusively with separate funds. Avoid using shared marital income to cover these costs.

5. Consider a Trust

Setting up a trust for your inheritance can provide additional layers of protection. A well-structured trust ensures that the inheritance remains distinct from marital assets, regardless of how it’s used.

Tracing Your Inheritance as Separate Property

If your inheritance has become commingled with marital or joint assets, don’t lose hope—protecting what’s rightfully yours is still possible. This can be achieved through tracing, which involves carefully analyzing detailed records such as bank statements, probate documents, and transaction histories to identify and separate your inheritance from other funds or assets. While it can be a meticulous and time-consuming process, with the right legal support and thorough documentation, you can build a strong case to untangle even partially commingled assets and safeguard your inheritance.

Take Action to Protect Your Assets

Gifts and inheritances are meant to be safeguarded, but without proper steps, they can easily lose their protection under Ohio law. If you have concerns, don’t wait for uncertainty to snowball into unfortunate outcomes. At Kvale Antonelli & Raj, our experienced family law attorneys are dedicated to helping you maintain the integrity of what’s rightfully yours.

Contact us today to schedule a consultation and gain peace of mind knowing that your inheritance will be handled with care and experience. Your financial security is our priority.