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What happens to inherited money in a divorce?

The process of dividing property is the most time-consuming and technically demanding part of many divorces. The two spouses must agree on how to split up their marital property under Colorado law.

Colorado calls for "equitable distribution" of marital property in divorce. Generally, this means the marital property must be divided in a way that is fair, and does not leave one spouse at a distinct financial disadvantage. But before the spouses can get to that point, they must divide their separate property from their marital property.

For most purposes, marital property includes assets that were bought or received during the marriage. It generally does not include property the spouses owned before the marriage, gifts they received during the marriage or property they acquired after legal separation. Some people ensure that certain items of property will not become marital property by signing a prenuptial agreement.

Inherited property is generally exempted from marital property if it was inherited by just one spouse during the marriage. For example, if during the marriage of John and Susan, John's uncle dies and leaves a will naming John as his heir, a court will likely consider that inheritance as John's separate property. However, if John's uncle names both John and Susan as his heirs, the inheritance would be part of the marital property.

There are other ways where an inheritance can become part of the marital property. One is when the inheritance is so thoroughly commingled with the marital property that a court finds it has lost its separate status. For example, if John puts his inheritance in a joint account with Susan and they use those funds as joint property for a number of years before the divorce, a court might find that the inheritance has lost its separate status.

There are many things to consider when dividing the property in a divorce. An experienced family law attorney can help people understand their rights and advise them on their options.

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Mary Kay Kramer, P.C.
1820 West Colorado Avenue
Colorado Springs, CO 80904

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