Divorce is never easy, but it can be especially complicated when there are significant assets involved. One of the most common questions that arise in such cases is how to divide an inheritance that one spouse received during the Middle Tennessee marriage or the divorce process.
The answer depends on several factors, such as whether the inheritance was commingled with marital property, whether the spouse who received the inheritance made contributions to it and whether there was a prenuptial or postnuptial agreement that addressed the issue. Generally speaking, Tennessee law considers an inheritance to be separate property of the spouse who received it, unless it was converted into marital property by commingling or transmutation.
Commingling occurs when separate property is mixed with marital property in such a way that it loses its identity and becomes part of the marital estate. For example, if one spouse inherits money and deposits it into a joint bank account that is used for paying household expenses, the inheritance may be considered commingled.
Transmutation occurs when separate property is changed in form or title in a way that indicates an intention to make it marital property. For example, if one spouse inherits a house and transfers the title to both spouses as joint tenants with right of survivorship, the inheritance may be considered transmuted and subject to division.
Portion as separate property
However, even if an inheritance is commingled or transmuted, the spouse who received it may still be able to claim a portion of it as separate property, if they can trace the source of the funds or assets to the inheritance. This may require presenting evidence such as bank statements, receipts, appraisals or testimony from witnesses.
Additionally, if the spouse who received the inheritance made contributions to it during the marriage, such as paying taxes, making improvements or generating income from it, they may be entitled to reimbursement for those contributions from the marital estate.
Finally, if there was a valid prenuptial or postnuptial agreement that addressed how an inheritance would be treated in case of divorce, the court will generally enforce the terms of the agreement unless they are unconscionable or against public policy.