Inherited property is generally safe from property division claims by soon-to-be ex-spouses.
While laws regarding the division of marital property upon divorce can vary from jurisdiction to jurisdiction, as a general rule your inheritance from a third party remains separate property even if you received the inheritance during marriage. As family courts typically divide only the marital estate in property division cases, your separate estate will usually remain safe. There are, however, several ways for your spouse to reach the equity in your inherited property.
Property Division Cases
In your property division case, your ex may be entitled to your inherited equity if the makeup of your marital estate is such that a court can't achieve an equal or equitable division of the estate without ordering you to pay her a distributive award. While courts will sometimes allow you to make installment payments (North Carolina, for example, allows a court to stretch it out for six years), your judge might order a lump-sum. If you don't have enough cash on hand to satisfy the property division judgment, you might find it necessary to sell the inherited property or take an equity line on it.
Titling of Inherited Property
Although your state might define your inheritance as separate property, this won't protect your inherited equity in a home that you titled jointly. One common problem arises when one party inherits a home and later borrows money against it. Unable to qualify for the loan on his own, he needs his wife on the mortgage. As both parties are obligated on the loan and usually aren't contemplating divorce at this point, the party who inherited re-titles the property jointly. This will probably be considered a gift to the marital estate when the parties later split.
Child Support
Getting behind on child support can endanger all of your personal property, not just the equity in an inherited piece of real estate. Some states' laws (North Carolina, for example) allow for a lien upon real estate and motor vehicles for unpaid child support. In a case for retroactive child support -- support awarded back to a date before child support was initially set -- your family court judge could decide to satisfy those judicial arrears by ordering a transfer of the equity in the home or the issuance of a second mortgage in favor of your spouse (or ex-spouse).
Alimony
Just like with child support, your separate property can be involved in an alimony case to help satisfy unpaid arrears or to pay a retroactive award. Additionally, while alimony usually requires an analysis of the dependent spouse's needs in conjunction with the supporting spouse's ability to pay, some states allow a court to require the supporting spouse to deplete his separate estate in order to pay an alimony award. As such, you could be forced to cash out the equity in your inherited property in order to pay an alimony award that you can't satisfy on your income alone.
Tags: your inherited, child support, marital estate, property division, separate property