Is Inheritance Considered Marital Property in a Divorce?
Money from Mom and Dad. The family home that’s been passed down for generations. That inheritance your spouse got from their grandparents during your marriage.
When you’re heading for divorce, figuring out what happens to inherited assets can feel like opening a can of worms.
As divorce attorneys, we get asked about inheritance all the time – and while the legal principles aren’t actually that complicated, the emotions around family money and property often are. Let’s cut through the confusion and talk about what really matters when it comes to inheritance in your New Jersey divorce.
Marital vs. Separate Property in New Jersey
Before we dive into the topic, let’s talk about two important categories of property in a marriage.
What’s Marital Property?
Think of marital property as anything that becomes part of your shared financial life after you say, “I do.” This includes:
- Your paycheck (yes, even if you earned every penny)
- Real estate bought during the marriage
- Retirement accounts and pensions that grew while you were together
If it came into your life while you were married, odds are it’s going to be on the table when it’s time to divide assets.
What’s a Separate Property?
Separate property is yours—and should stay yours—unless something changes that status. It typically includes:
- Assets you had before the marriage
- Gifts made to just you (not shared gifts like that new blender from Aunt Kathy)
- Inheritances, whether they came before or during your marriage
However, there’s a catch: Separate property isn’t immune to mistakes. If you’re not careful, what was once only yours could easily become “ours.”
When Inheritance Turns Into Marital Property
New Jersey law, under N.J.S.A. 2A:34-23(h), typically protects inheritances. That’s the good news. The bad news? How you handle that inheritance can quickly change its status.
1. Mixing Funds: The Silent Trap
You receive a $100,000 inheritance and—without thinking—deposit it into your joint bank account. You use that account for groceries, vacations, and everyday bills. Suddenly, that inheritance might not be so “separate” anymore.
2. Paying Shared Expenses with Inheritance
Maybe you used part of your inheritance to cover the mortgage or fund a family trip. While generous, that contribution can be seen by the court as blending your inheritance into the fabric of your marital finances.
3. The Value Appreciation Dilemma
Let’s say you inherit a house. Even if you keep it separate, any increase in the home’s value during the marriage might be considered marital property—especially if your spouse contributed to renovations or paid for maintenance.
How to Protect Your Inheritance in Divorce
If you’ve received an inheritance—or expect to—protecting it requires planning:
1. Use a Separate Account
This isn’t the time to be casual. Set up a bank account with only your name on it and deposit inherited funds there. No joint spending allowed.
2. Consider a Prenup or Postnup
Prenups are not only for celebrities. They’re practical, effective, and can clearly state that your inheritance stays with you if the marriage ends.
3. Document Everything
Create a paper trail. Keep records of every dollar, every transaction, and every statement related to your inheritance.
4. Get Legal Advice Early
Don’t wait for problems to arise—consult a family law attorney as soon as you receive an inheritance.
What Does “Equitable Distribution” Actually Mean?
New Jersey isn’t a 50/50 state. Instead, it follows equitable distribution, meaning courts divide assets fairly rather than equally, considering:
- How long the marriage lasted
- Each spouse’s contribution (financial and otherwise)
- Future earning potential for each spouse
- Who contributed more to the family’s well-being, whether financially or by raising kids
Even if your inheritance remains separate, it can still influence how other marital assets get divided.
Can Inheritance Affect Spousal Support?
You bet. Even if an inheritance isn’t split between you and your ex, it could still impact spousal support decisions. A larger inheritance might reduce your need for financial help—or increase your ability to pay support.
Busting Common Inheritance Myths
“If I inherited it, it’s untouchable.”
Not necessarily—especially if you’ve mixed it with marital funds.
“Prenups are for millionaires.”
Nope. They’re for anyone who wants to protect what’s theirs, regardless of wealth.
“Older inheritances are automatically protected.”
If you’ve mixed those assets with shared marital property, they could become part of the marital estate.
Overwhelmed? We’ve Got Your Back.
Divorce is hard enough—don’t let inheritance worries make it harder.
At Netsquire, we help New Jersey residents protect what’s rightfully theirs. Our experienced family law attorneys are ready to guide you through the complexities of divorce and inheritance protection.
Contact us today for a consultation. We’ll help you safeguard your future—and your peace of mind.
About the Author
John Nachlinger is a co-founder and managing attorney of Netsquire, a family law firm focused on streamlining divorces through effective mediation, settlement drafting, and court filing assistance. As a New Jersey Qualified Mediator, John guides couples toward equitable agreements without the cost and stress of litigation.
Recognized as a New Jersey Super Lawyer for over a decade, John’s client-focused approach aims to foster understanding during challenging transitions. With a background spanning top law journals, judicial clerkships, and boutique family law firms, John now applies his analytical skills to create workable solutions for all parties. His mediation services reshape the divorce journey by prioritizing compassion and compromise.
