( coming soon )
In Arizona, many people think that if they get divorced, their inheritance automatically becomes part of what’s divided with their spouse. Fortunately, that’s not always true.
Arizona’s community property laws do make most assets acquired during a marriage jointly owned, but inheritances are generally treated as separate property—as long as they’re kept apart from shared accounts or used only by the inheriting spouse.
If your inheritance is mixed with marital funds or used for joint expenses, it may lose its separate status. Taking simple steps to keep an inheritance seperate can go a long way in protecting it. For those facing divorce, the Law Office of Daniel Hutto can offer the guidance needed to help preserve your inheritance and personal assets.
Here’s what this article will cover:
- Is My Spouse Entitled to My Inheritance in Arizona?
- How Do I Protect My Assets from Divorce in Arizona?
- What Counts as Commingling Assets, and Why Does It Matter?
- 8 FAQS: Protecting an Inheritance From Divorce
- Contact a Family Law Attorney From the Law Office of Daniel Hutto
How an Arizona Family Law Attorney Can Help
Our Phoenix Family Law Attorneys are Here to Help!
Is My Spouse Entitled to My Inheritance in Arizona?
Under Arizona law, particularly ARS § 25-211, Arizona generally classifies assets acquired during a marriage as community property, which means both spouses may share equal ownership rights. However, an important exception exists within the statute, specifically noted in § 25-211(A)(1), which states:
assets acquired “by gift, devise, or descent” are considered separate property.
What “Acquired by Gift, Devise, or Descent” Means
The phrase “acquired by gift, devise, or descent” specifically refers to property that is given to one spouse through an inheritance (whether it be cash, real estate, or other assets). Here’s a breakdown of the terms as they relate to inheritance:
- Gift: This applies when assets are gifted specifically to one spouse. If, for example, a family member gifts a valuable item or sum of money directly to one spouse, that asset typically remains separate from marital property.
- Devise: In legal terms, “devise” refers to the transfer of real or personal property through a will. If a spouse inherits property according to a relative’s will, that inheritance is considered separate property, so long as it is not commingled with marital assets.
- Descent: Descent generally covers inherited property received without a will, such as when a spouse inherits under state intestacy laws (applicable when someone passes without a will). Assets inherited in this way are likewise considered separate property under Arizona law.
Why This Matters for Inheritance During a Divorce
Under ARS § 25-211, inherited assets remain separate property, meaning your spouse does not have an automatic right to them if they were intended solely for you. However, to retain this protection, it’s important that the inheritance is kept separate from marital funds and not commingled with jointly held assets. Once an inheritance is combined with joint accounts or used for joint purposes, it may lose its separate status, potentially making it accessible to both spouses during asset division.
How Do I Protect My Assets from Divorce in Arizona?
Protecting your assets, including an inheritance, during a divorce can be achieved through specific strategies under Arizona law. Below are effective methods to consider:
⑴ Establish a Postnuptial Agreement
If you did not sign a prenuptial agreement, a postnuptial agreement can be created during the marriage to outline ownership of assets, including inheritances. This agreement helps clarify asset divisions and establishes protections for property acquired individually.
⑵ Use a Trust
Placing inherited assets in a trust is another way to protect them from becoming marital property. Trusts are legal entities that can maintain the separate status of inherited funds or properties, ensuring they remain designated for you alone in case of divorce.
⑶ Keep Detailed Financial Records
Accurate records of all inherited assets, including property value and any income generated, help establish them as separate property. Documentation can be vital if these assets’ separate status is challenged during divorce proceedings.
⑷ Avoid Commingling Assets
One of the simplest ways to protect your inheritance is by keeping it in separate accounts and refraining from using it for joint expenses. This ensures that the inherited assets retain their status as separate property, protected from division.
What Counts as Commingling Assets, and Why Does It Matter?
Commingling assets refers to the practice of mixing separate property with community property, which can complicate ownership claims during a divorce.
Examples of Commingling
- Joint Accounts: If you deposit inherited funds into a joint bank account shared with your spouse, those funds may lose their status as separate property. Once mixed, it becomes challenging to trace the original source of the money, making it difficult to argue that the funds should remain yours alone.
- Shared Expenses: Using inherited money to pay for joint expenses, such as mortgage payments or household bills, can also lead to commingling. When separate funds are used for community obligations, it creates a claim that the assets were intended for joint use, thus diminishing their separate status.
- Purchasing Joint Property: If you buy property, such as a home or vehicle, with inherited funds and place it in both your name and your spouse’s name, that property can be viewed as community property. The act of co-owning property with your spouse means that the inherited asset may be subject to division in a divorce.
8 FAQS: Protecting an Inheritance From Divorce
- Is an Inheritance Considered Community Property in Arizona?
No, Arizona is a community property state, but inheritances are generally treated as separate property if they are kept distinct from marital assets. This means that as long as the inheritance remains separate and is not commingled with shared funds or used for joint expenses, it should be protected in a divorce. However, consulting an experienced family law attorney can help ensure proper handling of these assets.
- What Happens if an Inheritance is Commingled with Marital Assets?
When an inheritance is commingled with marital funds, such as being deposited in a joint bank account, it may lose its status as separate property. This process, called “transmutation,” can make the inheritance subject to property division in a divorce. Keeping inherited funds in a completely separate account is the best way to prevent this.
- Can a Trust Help Protect Inheritance Funds in a Divorce?
Yes, establishing a revocable trust or other estate planning strategies can help protect certain assets, including inheritance, in the event of a divorce. A trust keeps assets separate and managed by a trustee, reducing the chance that they’ll be classified as community property.
- Does a Spouse Have a Right to My Inheritance if I Move Out of Arizona?
If you move out of Arizona, your inheritance’s protection may vary depending on the property division laws in your new state. Arizona’s community property protections might not apply elsewhere, and assets could be viewed differently.
- Can a Prenuptial or Postnuptial Agreement Protect My Inheritance?
Yes, prenuptial and postnuptial agreements are effective ways to manage and protect inheritances. These agreements specify that certain assets, including an inheritance, will remain separate property in case of a divorce.
- Is Inheritance Factored into Alimony and Child Support Calculations?
Generally, an inheritance is not directly considered in determining alimony or child support. However, if inheritance funds are used to supplement income or contribute to household expenses, they may indirectly affect spousal or child support calculations.
- What Steps Can I Take to Keep My Inheritance Protected?
- Avoid Commingling: Keep inheritance funds in a separate account, away from marital funds.
- Consider Estate Planning: Using a revocable trust can help protect assets from potential claims in a divorce.
- Keep Documentation: Detailed records can verify the inheritance’s separate nature if needed.
- Use Legal Agreements: Prenuptial or postnuptial agreements clarify asset ownership and can prevent disputes over inheritances.
- Will My Spouse Inherit My Assets Automatically If I Pass Away?
Inheritance rights are separate from divorce law. If you wish to ensure a specific beneficiary, estate planning is essential. Consulting an attorney can help designate beneficiaries and outline how assets should be handled in the case of death or divorce.
Contact a Family Law Attorney From the Law Office of Daniel Hutto
The Law Office of Daniel Hutto is here to help individuals across Arizona protect their assets and secure their future in family law and divorce cases. Led by attorney Daniel Hutto, the firm offers guidance on Arizona’s community property laws, including strategies to safeguard inheritances and other personal assets during a divorce.
Daniel Hutto brings not only a deep understanding of family law but also a genuine commitment to his clients’ well-being. He works closely with each client, ensuring they feel informed and supported throughout the process. With experience serving clients in Phoenix, Chandler, Scottsdale, and nearby areas, Daniel’s approach is straightforward and focused on providing clear solutions.
If you’re looking to protect your inheritance or other assets during a divorce, reach out to the Law Office of Daniel Hutto at 602 536-7878. Daniel and his team are ready to provide the guidance you need with respect and understanding.
