Money is green and giving away half of it makes me blue …
In Florida, when one spouse inherits property or money solely either before or during the marriage, the inherited asset is nonmarital and not subject to equitable division of property in a divorce. However, there are circumstances that can transform the character of all or part of an inheritance into marital property that is subject to division in divorce.
NONMARITAL INHERITED FUNDS
A common issue in divorce arises when the owner of nonmarital money deposits the funds in the same account with marital funds. The nonmarital funds could have been directly inherited or, if an inheritance was in the form of real estate or personal property, if the owner sold the inherited property, the money received in the sale remains nonmarital since it was acquired in exchange for a nonmarital inheritance.
The question becomes whether in this situation, the spouse who separately owns the inherited money intends to share it as a gift to the other spouse during the marriage. If so, the money becomes a marital asset subject to division in divorce.
If the nonmarital, inherited money is kept in a separate account and no marital money is deposited there, it shows evidence of intention to keep the money nonmarital. However, if marital funds are also deposited there and marital and nonmarital money is comingled, Florida cases have held that this creates a presumption that the owner of the inheritance intended to gift half of the inherited funds to the other spouse.
At this point, the spouse who inherited the money has the burden to rebut the presumption by showing that he or she did not intend to make a gift.
When an asset inherited by one spouse has its value enhanced because of the effort of either spouse during marriage or because marital funds were spent to do so, the appreciation in value of the nonmarital asset becomes marital subject to equitable division in divorce.
For example, if marital funds such as wages earned during marriage are used to repair or improve an inherited building owned by one spouse, the court in divorce could find that the resulting increase in value to the building may be a marital asset subject to equitable division.
Similarly, if one spouse separately owns a piece of inherited furniture, but one of them during the marriage refinishes and repairs the item, increasing its value, the added value would be marital.
Whether an inherited asset remains separate, nonmarital property can be a complex legal and factual issue in Florida divorce. Speak to a lawyer with questions about inheritance and divorce. The earlier in the relationship a person seeks legal advice, the better. For example, the parties may decide to sign a prenuptial agreement before marriage in which they agree an inherited asset will remain nonmarital under any scenario.