During a divorce, one of the most challenging issues that a couple needs to work out is the division of marital assets. This is especially true when the couple has a significant amount of assets that may include a home and other real estate, retirement accounts, stocks, and other valuable property. Another issue that may complicate things further with the division of property is if one of the spouses has received a large inheritance or is about to receive one.
Are Inheritances Considered Marital Property in Alabama?
The first issue to look at with regards to inheritances is whether or not they are included in the marital estate when a couple divorces. In general, the answer to this question is “no”.
Gifts and inheritances that are received by one spouse are typically considered separate/nonmarital property, and as such, they might not be included in the division of the marital estate. There are some notable exceptions to this rule, however.
Here are some scenarios in which an inheritance could become marital property:
- The inherited funds were deposited into a joint banking account which both spouses had access to and used.
- The inherited funds were used as part of a down payment to purchase a shared residence.
- The inherited funds were used to make renovations or other types of improvements to a shared residence.
- The inherited funds were used to start a business that both spouses own and are working in.
- The inherited funds were used for any other shared expenses that the couple had.
In general, if there is any situation in which inherited funds became co-mingled to the point where it is difficult to determine which funds are separate and which funds belong to both spouses, then there is a good chance that the inheritance will end up becoming part of the marital estate.
The courts have the final word on this. And as with most other divorce-related issues that cannot be worked out between the spouses, their decision is based largely on the specific circumstances of the case and the strength of the arguments presented by the attorneys who represent the spouses.
How Do Inheritances Impact Alimony/Spousal Support in Alabama?
Spousal support is another issue that could be affected by an inheritance that either of the spouses receives or is expected to receive. Spousal support is not awarded in every divorce, and whether it is awarded is determined mainly by the financial needs of the lower-earning spouse and the financial capability of the higher-earning spouse.
If either of the spouses receives an inheritance, this is likely to impact any alimony award, particularly if the amount that is inherited is significant. For example, if the higher-earning spouse inherits an asset that produces an additional income stream, this could give that spouse the financial capability to pay spousal support or pay a higher amount of support than what was already going to be awarded.
If, on the other hand, an inheritance is received by the lower-earning spouse, then their alimony award could be reduced as a result. In some cases, the inheritance could be large enough that the lower-earning spouse no longer needs to receive alimony at all. This again is decided by the courts based on individual circumstances and the strength of the legal arguments presented.
It is important to point out that inheritances only impact an Alabama divorce if one of the spouses has already received it or they are going to receive it as soon as the estate of a deceased loved one is settled. If they are expected to inherit property from a family member who is still living, however, this should not factor into the divorce at all.
The family court cannot consider an inheritance that a spouse expects to receive from someone who is still alive, even if they know what their will says and what property they are supposed to inherit. The reason is that as long as this person is alive, finances could dwindle, properties could be sold, and any number of other material circumstances could change.
The bottom line is that you cannot count on an inheritance until a decedent’s estate is settled or for all intents and purposes is settled but they are just waiting on the distribution of the inherited property.
Work With Our Established Southern Alabama Family Law Firm
Getting divorced can be stressful, and things can become even more difficult when you are dealing with inherited assets and other complications. This is why it pays to work with a firm that has in-depth experience with both family law and estate/probate litigation.
For more than a century, Stone Crosby, P.C. has successfully represented clients in southern Alabama with even the most complex legal matters. To set up a personalized consultation with one of our experienced attorneys, message us online or call our Daphne, AL office today at (251) 626-6696. We look forward to serving you!