Myths of Inherited Assets

Many individuals believe that inherited assets are not subject to asset division during a divorce. However, this may not be the case. The courts have ruled and reaffirmed that Connecticut is an all-property, equitable distribution state, meaning that the court may award any property, in whole or part to the other spouse during a divorce, regardless of when and how the inherited property was acquired. The court will look to different factors when determining the amount the inheritance, if any, to distribute at the time the dissolution. However, there is no bright line rule for a specific amount or percentage.

Connecticut General Statutes 46B-81(c) gives the Court broad discretion in dividing the marital estate. No statute or case law calls for an automatic 50/50 division of an inherited asset. The issue of whether the court could order a distribution of property a spouse received from an inheritance has been litigated and determined that the court has broad powers to assign to a spouse property that was received by the other spouse as an inheritance. The Connecticut Appellate Court considers a number of factors, including each spouse’s amount and sources of income, employability, and the opportunity of each for future acquisition of capital assets and income. Thus, if an individual has received an inheritance, they are not automatically required to share that with the other spouse. While it is true that an inheritance is an asset that could be subject to division under an all property scheme, it is ultimately up to the judge to determine how all the assets should be assigned. For example, a judge, after weighing all of the factors, could decide that the inheriting spouse is not as employable as the non-inheriting spouse and thus should receive their full inheritance in order to offset their inability to find gainful employment and contribute to a retirement plan.

Clearly the Connecticut Courts are divided as to how much, if any, of the inheritance will be distributed at time the time of dissolution. In a 2013 case Weyher v. Weyher, both the Husband and Wife received inheritances during the marriage. The Husband deposited some of his inheritance into a joint checking account shared with the Wife and the rest into personal accounts, while the Wife invested her inheritance into her own company. The Court ruled the Husband’s inheritance was part of the marital estate and ordered a portion of Husband’s inheritance from his personal account to be distributed to the Wife.

However, in 2014 the Stamford Court in Schweizer v. Schweizer held that the Husband and the Wife were each able to keep their inheritances free and clear of the other. Here both Husband and Wife received an inheritance during the marriage and they each kept their inheritance in separate accounts and trusts in their name only. The Court held neither Husband nor Wife ever demonstrated any intention or displayed any conduct that could be construed to treat the inheritance money as part of the martial estate, and therefore, did not distribute the inheritance between the two parties.

Connecticut Courts have rejected the claim that a trial court’s ability to divide the inherited assets depends on the whether the inheriting spouse gifted to the marital estate any portion of the inherited funds. Accordingly, the court’s power to assign the inherited funds is not dependent on any finding of ownership by the other spouse. Moreover, the courts have also rejected the contention that the inheriting spouse is entitled to receive the original value of the inheritance and the non-inheriting spouse is entitled to only a share in the appreciation in the value of the inheritance during the marriage. BEWARE, any portion or the entire inheritance is subject to equitable division.