On numerous occasions, we have been asked how inheritances and gifts are treated in divorces in Pennsylvania.
The first thing you need to understand is how marital property is divided in a divorce. In Pennsylvania, the courts divide marital property through a process called equitable distribution. With regard to gifts and inheritances, marital property does not include property acquired by gift, except between spouses, an inheritance or property acquired in exchange for such property. Gifts between spouses are considered marital property and are subject to equitable distribution.
Unless an agreement is reached on division, the court will weigh a number of factors to determine how to equitably divide the marital estate. There are numerous factors that the court will use to determine in what percentage the estate is divided. In order to keep an inheritance or gift (except between spouses) from being considered marital property, it must be kept completely separate from marital property. If the inheritance or gift is commingled and not held separately from marital assets, it loses its character as a non-marital asset and becomes subject to equitable distribution. An inheritance or gift left or given to only one of the spouses and not comingled in any way is not considered marital property subject to division. However, the increase in value of the inheritance may be considered marital property subject to equitable division.
People should certainly keep this in mind when thinking of separating or are interested in keeping certain assets out of the marital estate. If you want to ensure that you protect your assets you must be cognizant of the issues surrounding inheritances and gifts.