Colorado spouses who receive inheritances or large monetary gifts before or during their marriage should know that they can take steps to protect those assets if they ever get divorced. In general, gifts or inheritances that are given to one spouse individually are protected from division during divorce. However, there are exceptions.
If all or a portion of the money is commingled with joint funds or used to purchase a joint piece of property, it can become a marital asset and the spouse that did not receive the inheritance or gift may be able to claim a portion of it during the divorce proceedings. A prenuptial or postnuptial agreement could provide protection of the asset from the other spouse. Because Colorado is an equitable distribution state, assets are not necessarily divided equally between divorcing spouses. When assets are considered marital property, it doesn't matter where they came from or who they were given to as a gift. The court does consider several other factors in how to distribute a couple's property when they get divorced.
To avoid disputes over gifts or inheritances during a divorce, the spouse who receives the cash or property should have clear documentation of who it was given to and whether repayment is expected. Cash should be kept in a separate bank account. Anything purchased with the money may be joint property.
A family law attorney with experience in divorce matters may help a client understand which property is subject to division and which assets will be deemed separate property. Because assets obtained after a couple separates are typically not treated as marital, the attorney may advise a client to keep receipts and earnings statements to verify ownership and help to ensure proper classification.
Source: Forbes, "Divorcing Women: Here's How to Protect Your Inheritances And Gifts", Jeff Landers, August 19, 2014