At Cohen Family Law, we advise clients in Arizona about divorce and related matters, including the division of marital property. If you have received an inheritance during the course of your marriage, you probably have concerns about how divorce will impact your inheritance.
Well-versed in Arizona’s community property laws, we are committed to providing clients with informed representation when they need it most. By working with our experienced family law attorneys, you will have comfort knowing your property rights, including your inheritance will be protected. Contact our Phoenix office today to set up a consultation.
Is an inheritance considered marital property in an Arizona divorce?
The first thing to know is that Arizona is a community property state for purposes of divorce. This means that the marital property must be divided equitably between the spouses. This does not mean an equal split, but one that is fair and reasonable to both spouses and considers most of the property that was acquired during the marriage, including:
- The marital residence
- Other real estate
- Cars, boats, recreational vehicles
- Income, wages, and salaries
- Savings and investments (e.g. stocks, bonds, mutual funds)
- Pensions, 401(k)s, IRAs
- Furniture, artwork, collectibles
- Debts (e.g. mortgages, credit cards, student loans)
Each spouse gets to keep his or her separate property, however, including property acquired before the marriage, an inheritance that was received individually, and any property included in a valid prenuptial agreement. While this seems straightforward, it is not usually possible to split a marital residence in half.
Therefore, Arizona courts determine the value of the community property as a whole and divide the net worth so that each party retains ownership of 50 percent of the communal assets. At the same time, an inheritance can increase the value of the marital assets between the spouses. Depending on how the inheritance is handled, dividing the marital property can become complicated.
Is an inheritance always considered separate property in Arizona?
Again, a spouse who receives an inheritance during marriage retains those assets in a divorce, as long as those assets are kept completely separate from the community property. If the inheritance is commingled with the community property, then it may lose its designation as separate property.
In short, keeping track of which assets are community property, as opposed to being part of the inheritance, is difficult. As an example, if an inheritance is placed in a joint bank account, or used to make home improvements, the court will not be able to distinguish that property from other community property. Because the marital assets and the inheritance have been commingled, all those assets will likely be considered community property in a divorce.
How to Protect Your Inheritance in an Arizona Divorce
At Cohen Family Law, we regularly work with clients to create legal instruments to protect their inheritance in a divorce, such as trusts and prenuptial agreements:
- Trusts are an effective way to manage, control, and protect the ownership of assets, including an inheritance in a divorce. While trusts are often thought of in the context of estate planning to determine how your assets will be distributed, a properly structured trust will ensure that your inheritance remains separate property, thereby excluding it from being divided.
- Prenuptial agreements can be used to protect your separate property, including an inheritance, in an Arizona divorce. A well-conceived prenuptial agreement specifies the property ownership and debts of each party and clarifies their property rights in the event of a divorce, as well as how joint bank accounts and household payments will be handled after divorce.
- Post-marital agreements are designed to clarify the property ownership rights of each spouse during the marriage, and like a prenuptial agreement, can be used to exclude an inheritance from the division of marital property.
Ultimately, the best way to protect your marital property rights and your inheritance is to work with an experienced Arizona divorce attorney.
Why Choose Cohen Family Law to Handle Your Divorce?
Given that a divorce is a difficult transition that can dramatically impact your finances, it is crucial to protect the inheritance you received either before or during your marriage. When you consult with us, we will take the time to understand your circumstances and work with you to protect your property rights.
Our experienced family law attorneys can help with every aspect of your divorce, including dividing the marital assets, spousal maintenance, child custody, and child support. Above all, we will offer you compassionate, efficient representation and dependable service.
Contact Our Experienced Arizona Divorce Attorneys Today
If you have concerns about how divorce will impact your divorce, turn to Cohen Family Law. We have a well-earned reputation as trusted advisors who always work in the best interests of our clients. Contact our office today so we can get to work on protecting your inheritance.