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Sunday, April 3, 2011

Inheritance, gifts and divorce: OH MY! 'Don't comingle if you're gonna be single'

Author: Marie E. Matyjaszek

Whenever the phone rings in the middle of the night, you know it’s not good news. As expected, your great-aunt Sally has died, and true to her word, she left you $100,000. After getting over the initial shock that you actually were her favorite niece, you roll over and think about waking up your husband to tell him the news. Then you remember you’ve been considering divorce, so maybe you should keep this to yourself. Decisions, decisions.

Even if you’re married, inherited property can remain the separate property of the spouse that received it. The length of your wedded bliss may influence how a court rules on the issue – and no, you can’t subtract the years that you just stuck it out for the kids. The shorter the marriage, the easier it is to keep the inheritance your own; the longer you stay together, the better chance your spouse has to say the monies were marital in nature.

A bevy of Michigan cases detail what outcomes may occur and a lot also depends on how you treat the inheritance. If you keep it in your name only, in a separate bank account and stay away from that pesky co-mingling, chances are good that you’ve helped it retain its separate status. But if you use it for marital purposes, or start to plan for your joint retirement together, the court may consider those actions as intent to share it with your hubby. And we all know that $100,000 buys a lot of tools and a really nice fishing boat.

So, if you want to keep those funds strictly earmarked for shoes, purses, and things that go bling, keep it to yourself as best as you can. The courts can look at whether or not you paid joint taxes on it, or if you “let pass other opportunities to accumulate savings because [you] were relying on the gifted or inherited asset to be there in the future.” (Michigan Family Law Bench Book, 09 Supplement, §8.26, p. 8-21.)

The same type of logic applies to items that are gifted to one spouse during the marriage as well. If the donor is still alive, you can ask her to explain her intent behind the gift. If she’s no longer lucid or has passed on, the courts can look at the way the gift was presented – whose names were on the check, and if there was any note or explanation as to the purpose for her generosity.

Sure, it’s not the most positive outlook to consider the state of your marriage when receiving an inheritance or gift, but the truth is you can’t take it with you when you die, so you might as well try to take it with you in the divorce.

First published 1/25/10, Jackson County Legal News, Vol. 45, No. 18

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