One of the most common questions I am asked by a spouse in the midst of a divorce is whether spouses are entitled to receive any portion of money or property that the other spouse inherits individually. The short answer is: it depends.
The general rule in Pennsylvania is that inheritances are the separate property of the spouse that received them and are not subject to equitable distribution in divorce. Of course, there are certain exceptions to this rule based on the factual circumstances of each case. For example, one main exception is if the inheriting spouse takes a monetary inheritance and deposits that money into a joint bank account titled with their spouse. In this instance, the inherited money may be considered commingled, therefore becoming marital property, which is subject to be divided in equitable distribution. Similarly, if a spouse inherits something other than money, like a plot of real estate or a house, and the inheriting spouse adds the non-inheriting spouse to the title as a joint owner, then the property would be considered a marital asset and subject to equitable distribution.
It is important to note that while the initial inheritance of a spouse is considered separate property, any increase in value in that inheritance during the course of the parties’ marriage is considered marital property subject to division. For example, if Spouse A inherits $100,000 from a parent’s will and during the course of the parties’ marriage, that $100,000 inheritance increases in value to $150,000 at the time Spouse A and Spouse B separate, the $50,000 increase during the parties’ marriage is considered marital property subject to equitable distribution, assuming Spouse A did not commingle the inheritance funds into any joint account during the marriage. But, the original $100,000 inherited by Spouse A before the marriage remains the separate property of Spouse A. This example applies similarly to inherited personal and real property as well.
The best way to keep inheritances separate property is to physically keep any monetary inheritance in a separate bank account away from any joint accounts you may have with your spouse and be sure not to deposit or commingle marital funds into the account containing the inherited funds. In the case of inherited personal or real property, be sure to keep these items titled individually in your name alone or your spouse may have a claim that such items are marital property as opposed to separate property.