Are Inheritances Split in Colorado Divorces?

When couples decide to end their marriage, they almost immediately want to know the laws regarding dividing marital property and debts. Colorado is an equitable distribution state, which means a marital estate is divided in an “equitable” or fair fashion, which doesn’t necessarily mean it will be divided equally. The spouses can agree on how to divide their property in a divorce settlement, but if they can’t reach an agreement, a judge will have to divide it for them.

As a general rule, only marital property is subject to division. Separate property remains separate and belongs to the spouse who acquired it. Marital property is all property acquired by either spouse during the marriage, regardless of who earned the income or whose name is on the title. Separate property is all property acquired by either spouse before the marriage or by gift or inheritance.

Inheritances As Separate Property

Generally, inheritances are considered separate property and are not divided in a Colorado divorce; however, if the funds are deposited into a joint bank account and they are commingled with marital funds, or if they’re used to cover marital expenses, such as to pay the mortgage, or pay for improvements on the couple’s house, the inheritance can lose its status as separate property. This is called “commingling of the inheritance.”

Comingling is the key factor to consider when dividing property in a divorce. Was the inheritance mixed with marital assets? Was the inheritance used to benefit marital assets? If so, it may no longer count as separate property. Instead, it may be included in the marital estate, which is subject to division.

If the inheritance was received before the marriage and later deposited into a joint bank account, once again, commingling has occurred. As long as the inheritance from before or during a marriage is kept in a separate bank account, it should be safeguarded in the event of a divorce. The best way to protect an inheritance, especially if it’s substantial, is to enter into a prenuptial or postnuptial agreement that clearly explains who owns premarital assets and how a future inheritance would be treated.

If you’re seeking advice regarding inheritances and divorce, contact our firm by calling (303) 747-4748 today.