Are Inherited Assets Subjected to Equitable Distribution During a Divorce?

This is a complicated question, so it requires a long answer. Marital assets are subject to equitable distribution during a Florida divorce. Generally speaking, inherited assets are not part of the marital estate. This means that they are not subject to equitable distribution unless they’ve been “commingled” with assets from the marital estate. To understand this concept further, we’ll review the case of Lakin v. Lakin, in which inherited property was “transmuted” into marital property and thus subject to equitable distribution.

Background of Lakin v. Lakin

The Lakin case highlights how inherited property can become marital property through the process of commingling. In this case, the court emphasized that the recipient of the inherited assets’ intent and conduct are important for determining whether or not the inheritance remains separate or becomes subject to equitable distribution during your divorce.

In Lakin, a dispute arose between the spouses regarding the characterization of inherited funds during the process of equitable distribution. One spouse received an inheritance during the marriage, which belonged to their individual estate as opposed to the marital estate. The inherited funds were deposited into a joint bank account and used for marital expenses. The other spouse claimed an interest in these commingled funds and argued their case before the court. Did commingling inherited money in a marital bank account cause the money to become part of the marital estate?

In this case, the answer is ‘yes’. The commingling of inherited funds with the marital estate made the money he received in his inheritance part of the marital estate. Thus, the separated property was “transmuted” or “transformed” into marital property. Marital property is subject to equitable distribution, while inherited funds generally are not.

How did the court come to this conclusion?

While Florida typically classifies inheritances as non-marital property, the court emphasized, in this case, that the treatment of the inheritance after it’s received is crucial to how it’s treated in a divorce. When an inheritance is commingled with marital assets, it creates the presumption that the inheriting spouse intended to gift half of the asset to the other spouse. In a case like Lakin, the inheriting spouse bears the burden of proof of presenting evidence to overcome the presumption. In Lakin, the inheriting spouse failed to present sufficient evidence to rebut the presumption that the separate asset was intended to become part of the marital estate.

Why is this case significant?

Lakin emphasized the legal principle that inheritances, while initially considered separate property, can become marital property if they are commingled with marital assets and the inheriting spouse fails to demonstrate a clear intention to keep them separate. The case underscores the importance of carefully managing all inherited assets during your marriage to preserve their status as separate property. The inheriting spouse should have kept those funds in a separate account.

Talk to a Clearwater, FL, Divorce Lawyer Today

Cairns Law, P.A., represents the interests of Clearwater residents during their divorce. Call our Clearwater family lawyers today to schedule an appointment, and we can begin discussing your next steps right away.

Source:

caselaw.findlaw.com/fl-district-court-of-appeal/1203339.html