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Is an Inheritance a Marital Asset in Utah?

The question of whether an inheritance is a marital asset is especially relevant when couples divorce and, more specifically, when they are unable to compromise on how to divide marital property. In these cases, courts themselves are called to divide the property.

How Property is Divided in a Utah Divorce

Upon divorce, a Utah court divides property using the principle of equitable distribution. This means that judges will take into account multiple factors in order to reach a fair or equitable result. Distribution depends on which property belongs to the marriage (i.e. marital property) and which belongs to each individual (non-marital property).

The factors a court takes into account when deciding what constitutes an equitable distribution include (but are not limited to):

  • duration of the marriage
  • each spouse’s age and health
  • each party’s occupation, level of education, and earning capacity
  • conditions to which each spouse is subject after the divorce (e.g. medical needs and childcare expenses)
  • amounts each spouse holds in non-marital (individual) assets

Non-marital Property

Whereas marital property refers to property acquired or earned during the marriage, non-marital property includes what each party owned prior to the marriage as well as items that either spouse received as a gift or through inheritance.

An inheritances is property or items passed down from an individual who has passed away—either by will or, if the decedent has failed to execute a valid will, through the Utah laws of intestate succession.

Inheritances: Non-marital or Marital Property?

In Utah, inheritances are normally considered non-marital property, even if an individual receives it while being married. For instance, if someone receives funds and puts that money into a bank account in his or her name exclusively and leaves the money there instead of using it for marital expenses, no matter what the other spouse claims, this money remains the separate property of the spouse who inherited it.

Inheritances can become Marital Property

If not careful, an inheritance that would normally be considered an individual’s separate property can become marital property through:

  • Commingling: An inheritance can be deemed marital property when a spouse commingles funds from the inheritance with marital assets. In these situations, inheritance money becomes hard to distinguish from marital assets. For example, if someone uses their inheritance money as a down payment on a family home for both spouses or deposits the inheritance into a joint bank account and mixes it freely with the couple’s money, it would likely lose its non-marital character.
  • Gifting Property to Spouse: When one spouse makes a “gift” of separate property to the other spouse, the separate property is converted into marital property. For a “gift” of separate property to occur, there doesn’t need to be a formal giving of the property, nor verbal indication that a gift is intended. A gift can occur when separate property (e.g. cash) is used to pay off marital debts, or the debts of the other spouse; when the other spouse is allowed to use the separate property as if it were their own.
  • Improving the Property: When the other spouse uses their time, energy, skills, or money to improve or preserve the other’s inheritance property, courts generally deem the spouse as having obtained an interest in that property. This could occur when, for example, one spouse brings a car or a house into the marriage and the other spouse uses his/her income to pay off the mortgage and loans on those items.

Marital Settlement Agreements

As opposed to giving the reigns to a court—an outside third party—who does not know the spouses’ situations firsthand, we believe it is more advantageous for divorcing couples to personally decide on fair ways to break up their belongings. We can accomplish this through a marital settlement agreement anytime before the final divorce judgment.

If you have questions about inheritance, we want to help. Contact David Pedrazas for a free consultation today!