If you inherit property while married, you might think it stays yours if you divorce. However, Indiana uses a “one-pot” system. This means the court puts all assets into one group to divide them. Your inheritance can be part of this split. This often leads to a surprise for many people in an Indiana divorce.
Understanding commingling
Commingling happens when you mix your inheritance with shared assets. When you do this, it is hard to ask the court for a larger share of that asset.
For example, if you put inherited cash into a joint bank account for bills, you have mixed the funds. Also, if you use inherited money to fix up your shared home, it is hard to track that money later. This makes it tough to ask for an unequal split of the home’s value.
The burden falls on you to prove that the court should not split inheritance equally, and clear documentation helps convince the court to deviate from a 50/50 division. Without clear documentation and tracing, Indiana courts will presume that they should split all marital assets (including your inheritance) 50/50.
Protecting your assets
If you want to preserve inheritance during an Indiana divorce, you should focus on separation, documentation and traceability. These are concrete steps you can take to protect your assets:
- Keep inherited funds separately: Use an account titled only in your name and avoid mixing marital income into it.
- Avoid retitling inherited assets: Adding your spouse to title can be treated as gifting part (or all) of the asset to the marriage.
- Maintain records: If you must use inherited assets, always keep a paper trail. For example, if you loan inherited money to pay a specific expense, keep written records of its status. Additionally, keep copies of the trust documents, account statements and records of any transfers.
- Consider a prenuptial or postnuptial agreement: Indiana generally enforces properly drafted agreements that define inherited property as separate.
You should assume your inheritance is marital property unless you can clearly trace it and prove it is yours. The best protection is proactive, and if disputes arise, your proactive choices will help shield you. Additionally, consider seeking legal counsel to evaluate the best legal options to protect your rightful inheritance.
