Division of Property, DivorceMarch 5, 20210 comments

Inheritance and Divorce in Virginia

Divorce can be a difficult and uncertain time. Many people have questions about the process. A common concern is how property will be divided, especially if some of the property was part of your inheritance. How does the court handle inheritance and divorce in Virginia?

Generally, an inheritance remains the exclusive property of the spouse who receives it, even if it was obtained during the marriage. However, some circumstances are different, and the inheritance may be subject to division by the court.

Classifying an Inheritance

In any Virginia divorce where there is in personam jurisdiction, the court may order the equitable distribution of the parties’ property and debts. First, the court must determine whether property is marital, separate, or hybrid (part marital/part separate). If property is classified as separate, it is not subject to division. If it classified as marital, the court would divide the property accordingly.

Virginia Code 20-107.3

This code outlines the classifications of property in detail. One type of separate property is defined as “all property acquired during the marriage by bequest, devise, descent, survivorship or gift from a source other than the other party”. This means inheritance property. Since the Virginia code defines inheritances and gifts from third parties as separate property, you may think it’s safe from division during a divorce. However, separate property can become marital property if the spouse is not careful.

After defining separate property, the code lays out situations where separate property can be transmuted into marital property based on the actions of either party. One example of this is called commingling. This simply means putting your assets together or mixing assets., like depositing a cash inheritance into a joint bank account. In this case, the cash inheritance would lose its separate property identity and be subject to division by the court.

Protecting Your Inheritance

If you want to protect your inheritance from becoming marital or hybrid property, and therefore subject to division by the court, you will need to keep the funds in a separate account away from marital funds. The funds should not be used for the benefit of marital property, such as paying down the mortgage on the marital residence. If you choose to use inherited funds, it should be thoroughly documented so that the court can trace those funds back to your inheritance. In some cases, such as with real estate, even a thorough tracing of the funds might not result in a dollar for dollar return, given the nature of real estate valuation.

Any inherited property should be kept solely in your own name. Avoid using your own personal efforts to increase the value of the inherited property during marriage. Finally, if you have received an inheritance and are not yet married, a prenuptial agreement is a great way to protect your inheritance.