In the complex landscape of divorce in Texas, the division of property often causes concern. The issue becomes especially thorny among couples with many assets and sources of income.
Texas operates under community property laws. Therefore, all assets that a couple acquires during a marriage are generally subject to division. However, the classification of inherited assets varies and can be a unique source of confusion and contention.
Inheritance as separate property
In most cases, Texas views an inheritance as the separate property of the recipient. According to the Texas Family Code, this includes assets that either party gains through a will or similar instrument. Also, assets an individual gains through a bloodline or adoptive inheritance are separate property.
As a result, an inheritance is not typically subject to equitable distribution. However, commingling can change the status of such assets.
The potential for commingling in longer marriages
The distinction of an inheritance as separate property can become less evident over the course of a longer marriage due to commingling. “Commingling” refers to the intertwining of separate and community property. Any time one’s separate property mixes with shared marital assets, it usually also becomes community property.
Several scenarios illustrate the danger of commingling. For instance, depositing inheritance funds into a joint account with a spouse blurs the lines between separate and community property. A court is apt to consider the entire account as shared assets.
Further, using inheritance money for shared expenses or improvements on marital property complicates the distinction. Again, the court is more likely to rule in favor of equitable distribution of these funds among both parties. Moreover, if neither mate maintains clear records, proving the separate nature of the inheritance can become practically impossible.
To mitigate these challenges, it is advisable for a married individual to keep inheritance funds in a dedicated account, separate from marital finances. Meticulous financial records can serve as valuable evidence in establishing the separate nature of inherited assets.
Clear documentation is often necessary to establish which assets are separate property. Mediation or a postnuptial agreement can clarify matters when essential paperwork is missing or unavailable.