Inheritance and Divorce in Arizona
If you are going through a divorce, or think you may be in the future, you probably have many questions. While not everyone has an inheritance, many people do, and they need to know what happens to that inheritance if they get divorced. Today, we want to talk about how an inheritance is affected by a divorce, as well as some of the things you can do to protect yourself and your finances.
Understanding Arizona law
When it comes to divorce in Arizona, most property is considered community property, meaning that it must be divided equitably between both spouses. This does not necessarily mean that the property division has to be exactly equal, but it includes just about all property that was acquired during the course of the marriage. This includes:
- The marital residence
- Pensions, IRAs, 401(k)s
- Stocks, commissions, and salaries
- Vehicles, RVs, and boats
- Other real estate
- Furniture, artwork, collectibles
- Any debts, including credit card debt, mortgages, student loan debt, and more
However, the laws are different regarding an inheritance. During the course of a marriage, one or both spouses may receive a large inheritance or gift. This can dramatically increase the amount of assets between a couple during the marriage.
Unlike other types of property acquired during the marriage, an inheritance is considered separate property, even if one spouse receives it while the marriage is ongoing. This means that the person who receives the inheritance can keep those assets after the divorce.
Click here for an article on inheritance and community property in Arizona.
Is the inheritance always separate property?
There are some exceptions to this. If the person who receives the inheritance keeps those assets completely separate from the community property, they will get to keep it after separation. However, if they do not keep the property separate, the issue becomes much more complicated. If separate property, whether inheritance or other property acquired before the marriage, is commingled with other community property, it could lose its special status as separate property. That is because it is often difficult to keep track of which money is community property and which of the assets were part of the inheritance.
For example, if you combine your inheritance money with the money in a joint bank account to buy a piece of property, there is no way for a court to distinguish that property from other community property. That money is now so mixed, or comingled, that the assets will likely be considered community property in a divorce. However, if only the inheritance money was used to purchase the property, then that property will likely retain its special status as separate property in the divorce.
Arizona law does allow couples to enter into marital agreements that can be signed before or during the marriage. These agreements are used to determine how property will be divided in the event a divorce does occur and could be beneficial if you have received or expect to receive an inheritance. For example, if you and your spouse intend to use both community assets as well as an inheritance to buy real estate, you could create a marital agreement that specifies who gets the property in the event of a divorce.
What you can do
If you are confused about any of this, please contact a qualified Arizona divorce attorney. Whether you are going through a divorce, think you may be soon, or are wondering about marital agreements, an attorney can walk you through what the law in Arizona says so you will be protected at all times. An inheritance is important, so make sure you understand how the laws work.
Click here to find out how to modify child support in Arizona.