Suppose you inherit money from a family member during your marriage. Is your inheritance subject to being divided under North Carolina’s equitable distribution statute? The brief answer: it depends.
North Carolina General Statute § 50-20 defines marital property as all real and personal property obtained and currently owned by either or both spouses during the marriage and before the date of separation unless that property is determined to be separate or divisible property. Separate property under N.C.G.S. §50-20 is real and personal property acquired by a spouse before or during the marriage through devise, descent, or gift. Applying the definitions of marital and separate property from N.C.G.S. § 50-20, any money or property you inherit from a family member would be separate property.
Suppose you put all of your inheritance into your joint bank account, is that money still your separate property? The answer, again: it depends. By commingling your separate property into a joint bank account, the court may determine that you have made a gift to the marriage, and those funds would be subject to division under N.C.G.S. § 50-20. If one spouse uses separate funds they inherited to purchase a home or property with the other spouse, is the new home or property marital? Under N.C.G.S. § 50-20, even if one spouse can show that property was purchased with separate funds, once you title the property in both spouses’ names, the court will likely find that this was a gift to the marriage during equitable distribution. The court looks to the parties’ intent, and titling property that was once separate as property owned by both spouses implies that there was an intent to make the property marital.
If you are married and have recently inherited money or if you have an inheritance that you plan to use to purchase property or a home, the advice of a family law attorney may save you from losing your inheritance. Remember to keep all inherited funds in a separate account in your name only to prevent creating a “gift” to the marriage and to ensure that your spouse does not have any access to your separate funds. If you inherited the money or property before the date of marriage, consider a consultation to discuss a prenuptial agreement with a family law attorney before getting married, and ensure you do not commingle funds after the date of marriage.
Note: This blog was originally published on January 5, 2021.