The question frequently arises in a divorce case as to whether or not an inheritance is a marital asset or non-marital asset. The Florida equitable distribution statute which deals with the distribution of assets, both marital and nonmarital, clearly sets forth that assets acquired separately by either party by non interspousal gift, bequest, devise, or descent, and any asset acquired in exchange for such assets, are non-marital. See Florida Statute 61.075(6)(b)2.
The initial determination as to whether an asset received as an inheritance is marital or nonmarital is rather straightforward. The issue can become more complex as the years go on in a marriage, and the separate nature of the inheritance becomes clouded.
In order for an asset to maintain its separate, non-marital status, it is very important not to commingle marital assets with non-marital assets. Therefore, in order to preserve the integrity of the inheritance being a non-marital asset, the inherited funds should be maintained in a separate bank account, in your own name, and you should never, ever deposit or commingle marital funds into your separate account.
If, for any reason you decide to commingle marital funds, you will probably learn the hard way that you have just converted your inheritance into a marital asset.
If there has been no co-mingling, your inheritance is relatively safe from being claimed by the other spouse as a marital asset. However, if there has been any enhancement in value and appreciation of your non-marital assets resulting from marital labor or effort, that enhancement in value becomes a marital asset subject to equitable distribution. An example would be if the inherited funds were placed into a brokerage account, and throughout the marriage, through the exercise of marital effort, the brokerage account appreciates in value. A portion of that appreciation, if attributable to marital efforts and labor, may very well be classified as a marital asset subject to equitable distribution.
When there is no comingling of marital assets with non-marital assets, the burden is on the spouse seeking to argue that enhancement in value of the non-marital asset has occurred as a result of the efforts of either spouse. This is not an easy task. Even if you are able to prove that marital efforts were utilized to enhance the value of the non-marital account, you still need to be prepared to argue what portion of that enhancement accrued as a result of marital efforts or labor, and what portion may just have occurred as a result of market conditions, which would not be considered a marital asset.
A good case, Gromet v. Jensen, which is an easy read, explains inheritances, appreciation and commingling. The case points out the extreme caution that you must exercise in maintaining your inheritances as their own separate property.
Mr. Gromet inherited $400,000 from his mother. He put the money in three separate brokerage accounts, and maintained those accounts solely in his own name throughout the marriage. In spite of Mr. Gromet taking all necessary precautions to isolate the three brokerage accounts, his wife attempted to lay claim to all of them, simply because she alleged that $1100 of marital funds were co-mingled into one of the three separate accounts set up by Mr. Gromet.
His wife was unable to prove any co-mingling of marital funds. She simply made an assertion that marital funds were commingled, without further proof. In spite of that, the trial court ruled that all three of Mr. Gromet’s accounts, which contained his inheritance, were marital assets subject to equitable distribution in his divorce case.
The appellate court quickly reversed this decision. Bald assertions of commingling, without proof, does not meet the burden of proof that is required under the law to convert non-marital funds into marital funds. Furthermore, the appellate court stated that even if $1100 of marital funds were commingled into one account, only that particular account would become marital. The other two accounts would continue to maintain their separate character.
If you are anticipating the receipt of an inheritance, or you are concerned about maintaining the separate integrity of your inheritance, call Alan R. Burton, an experienced attorney who can provide you with the appropriate advice in protecting your inheritance. Mr. Burton is accessible by calling him directly on his cell phone at 954-295-9222.