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Inheritance and Divorce in Phoenix, AZ

Inheritance and Divorce in Phoenix, AZ


Find out how an inheritance is influenced by divorce in Arizona. Our Phoenix Family Lawyers will explain the different options and nuances that may happen if getting divorced regarding an inheritance by one of the parties.

How Can I Shelter an Inheritance from a Marriage?

Arizona is a community property state, meaning that in a divorce, marital assets and debts will be split evenly between the spouses, but the spouses will keep their own separate property. Gifts and inheritance are typically classified as separate property, but must be properly separated from marital assets to avoid the asset being assigned any community property share. 

Inheritance and Marriage

Even if inheritance is received during a marriage, it will be treated as that spouse’s separate property. It is vital to understand the separate nature of inheritance, as it isn’t uncommon for divorcing spouses to agree to cede their share in an asset or pay higher alimony because they believe they have a right to their spouse’s inheritance. Unlike a pension and other community assets, one spouse doesn’t earn a share of their spouse’s inheritance by virtue of being married. 

Inheritance before Marriage

An inheritance received during marriage is separate property, so clearly an inheritance received before marriage is separate property as well. That doesn’t mean your spouse won’t try to go after it in a divorce. There are steps you can take when you receive your inheritance and before your divorce to prevent your spouse from having an entitlement to a share of it. 

Basics on Commingling Inheritance

Assets can become commingled if they are stored in the same account, are used to prove each other, and more. Assets that are commingled are essentially mixed together, and the spouses will likely need attorneys to untangle the mess and prove who is entitled to what. Your separate property may become partially or fully community property. 

Is an Inheritance Received During a Marriage Subject to Division?

This will depend on how good of a job the spouse who receives an inheritance does of keeping it distinct from community property. Your spouse may also receive a portion of an inherited property if they make improvements and assist in maintenance of the property. Your spouse may also become entitled to a share of your inheritance if commingling or transmutation is present. 

What is considered Inheritance?

Inheritance is a property or asset you receive after a loved one passes away. You may either be named as an heir in that person’s will, or you may be the next of kin if that person is intestate, or does not have a will. 

Is my spouse entitled to my inheritance if I divorce?

Your spouse may make contributions, monetary or nonmonetary, to your inherited property. For example, you inherit your family’s mountain cabin. Your spouse helps you clear out old belongings, clean and refurbish the cabin, and redecorate. Your spouse even refinishes a shower and paints a few walls. Your spouse also cleans the cabin each time you visit, preventing infestation and other damage to your property. While inherited property is typically separate property, your spouse may be awarded a partial share for the “sweat equity” they put into maintaining the property over the years. 

Exceptions to the Inheritance is Separate Property Rule.

      ** Transmutation **

Transmutation is when through some legal procedure, separate property is “transmuted” into community property. A common example of this is when one spouse receives an inherited asset, such as a spouse, and lists their spouse on the title of that property. That spouse would need to prove in court during a divorce that the intention was never to turn that inherited asset into a community property asset. 

      ** Commingling **

When your assets become commingled, the burden of proof in a divorce shifts to you to prove which amount is your separate property. Assets that become commingled will need to be “traced,” which can be complicated if there are significant withdrawals or interest in the commingled account. You should consult an attorney as soon as possible after receiving an inheritance to learn how to avoid commingling your inheritance with your marital assets, especially if you are considering divorce. 

The Risks of Commingling Inherited Funds

Many people may mistakenly commingle community and separate property without even realizing it. If you deposit an inheritance into an account with community funds, it could become untraceably commingled. 

Another issue with commingling inherited funds is that tracing back the source of funds for property division purposes can be extremely difficult. A common example is when spouses already have a stock portfolio, and one spouse expands that portfolio with inheritance funds. Later down the line, some stocks are sold and reinvested, while the proceeds from the rest are deposited into a savings account. If the spouses are to divorce, their attorneys will need to trace back the separate property deposit and determine how much of the total portfolio, including interest, it accounts for. You will need a family law attorney with plenty of skill and experience if you want to accurately trace back commingled inheritance funds. 

How Can You Protect Your Inheritance?

The first step you should take when you receive an inheritance is depositing it into an account that has no community property funds. Keep clear and precise records of when and where you deposit inheritance funds. You may also want to consider placing your inheritance in a trust with someone besides your spouse named as the beneficiary. 

Another way to protect your inheritance, if you expect one, is to specify how it will be treated in a pre- or post-nuptial agreement. Each of these can outline the intentions for certain assets. Any pre or post nuptial agreement must be free of fraud and coercion, and the spouses must have an opportunity to have the agreement reviewed by independent legal counsel. A solid agreement will be drafted and signed with the assistance of an experienced family law attorney, as the spouse may bring an action to challenge the agreement in a divorce. 

If you are fighting to protect your inheritance in a divorce, you need an expert attorney to represent you. Call the Phoenix Divorce Attorneys at My AZ Lawyers today for your free consultation with one of our family law attorneys. Receive guidance on your next steps, and a fair quote for assertive representation all at no obligation for you, call today!

Who Keeps the Home in a Divorce?

Who Keeps the Home in a Divorce?

Who Gets the House?

In Arizona, there are two types of property when it comes to marriage and divorce: community property and separate property. Community property, typically all property acquired during the marriage, is split evenly upon divorce. Separate property, typically property acquired before the marriage, will remain with the spouse who originally purchased it. There are exceptions to these, and separate property can potentially become commingled with community property. 

Should You Keep the House in a Divorce?

If the house is your separate property, you can keep it in the divorce. There are many reasons you may want to keep the house in a divorce, even if it is community property. The most common of these is because your children lived in that home during the marriage, and you want to keep things as close to normal as possible. While your children will have to adjust to new routines with the other parent, keeping the home will allow you to provide a place of familiar comfort. You may also have other ideas for the home after the divorce, like moving in your parents or other relatives. You may simply not want to move. No matter your reason, keeping the house will likely be a hotly-contested issue in your divorce. 

What if you can’t afford the House without the Spouse’s income?

You should talk to a family law attorney, who should be able to project if you will be receiving any support from your spouse after the divorce. Depending on a variety of factors, like length of the marriage, the difference in earnings between the spouses, and the standard of living during the marriage, the judge may order one spouse to pay spousal support, or alimony, to the other spouse. IF the couple shares children, the parent with less parenting time may be ordered to pay child support. Both of these payments can be used towards the mortgage and other expenses related to keeping the house. 

What are some options of what to do with the marital home?

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Sometimes, the easiest thing to do is to just sell the home and split the proceeds between the couple. The judge may order this if there is no other fair way to split the community property and the spouses can’t come to their own agreement. If one spouse is entitled to more equity in the house, the judge may award that spouse the house and give the other spouse other marital assets, or order the spouse keeping the house to “buy out” the other spouse’s share. 

Dividing Equity in the Marital Home

When one spouse wants to keep a community property marital home, the judge can order the equity to be divided to find a solution besides selling the home and splitting the proceeds. To make up for the equity in the home one spouse would be surrendering, the spouse keeping the home may be required to pay more or all of the marital debt the couple previously shared. If the couple shared assets like vehicles, investment properties, and more listed below, more of those could be awarded to the spouse who isn’t keeping the house. The spouse keeping the home can also give the other spouse the cash value of their share of equity, or “buy them out.” That way, the rest of the assets can be divided evenly without regard for the value of the marital home. 

What Factors will the Court Use in Order to Determine Who Gets the house?

The court will look at multiple factors when deciding who should be awarded the house. These include the financial circumstances of each spouse, their education and employability, their age and general health, contributions to the marital home, who is going to have custody of any shared children, marital misconduct, how the house was purchased, and the value of the house. 

Marital Assets will commonly be split between the 2 divorcing spouses in Arizona.  It is important to know what makes up “Marital Assets”.  Thus, there are no surprises 

Common examples of Marital Assets

  • The marital home
  • Vehicles purchased during the marriage
  • Businesses
  • Pensions and other retirement benefits earned during the marriage
  • Vacation and investment properties
  • Jewelry, instruments, and other personal assets purchased during the marriage
  • Stocks and other investments
  • Pets
  • Furniture

Common examples of Marital Debts

  • Credit Cards
  • Vehicle loans
  • Student loans
  • Personal debt
  • Medical bills
  • Business debt

Let Our Phoenix Divorce Attorneys Help

Our Arizona family law attorneys have helped numerous clients in Phoenix, Tucson, Mesa, and throughout Arizona with messy and hotly contested divorces. Our divorce attorneys are aggressive and fight for you. We ensure that you are not bullied by the other side. If you are going through a divorce in Arizona, it is extremely important that you have an experienced Arizona Divorce Attorney on your side. Our Arizona family law firm and its lawyers will give you the peace of mind you are looking for in such a difficult situation.

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