Divorce is rarely an easy process, and it becomes even more complicated when issues involving inheritance money come into play. One common question that arises in such situations is whether a spouse is entitled to inheritance, or a share of it, during divorce proceedings.
To shed light on this often-perplexing topic, let’s explore how divorce mediation handles inheritance and the factors that come into play.
The Role of Inheritance in Divorce
Inheritance money is typically considered separate property in the eyes of the law. This means that, in most cases, it belongs solely to the person who received it, rather than being classified as marital or “community” property.
However, like many aspects of divorce law, the situation can be more complex.
Divorce Mediation: A Neutral Path to Resolution
When couples decide to divorce, they have several options for settling their affairs. One increasingly popular approach is divorce mediation. Unlike the traditional adversarial court process, mediation encourages couples to work together to reach a mutually agreeable resolution with the help of a neutral third party, the mediator.
So, how does divorce mediation handle inheritance?
In mediation, both spouses are encouraged (well, STRONGLY encouraged…) to disclose all their assets, including any inheritance money.
This transparency is essential for fair and equitable negotiations.
Separate vs. Marital Property
A mediator will help the couple clarify whether the inheritance money should be considered separate or marital property.
If it was kept separate and not commingled with marital assets, it is more likely to remain the sole property of the inheriting spouse. When the inheritance money has been co-mingled with community money throughout the marriage, the spouse who received the inheritance has the burden to trace the money and show that it is all inheritance money. Otherwise, it may be considered a “gift” to the community. This can be resolved by two people sitting at the mediation table and discussing why it makes sense for it to be divided or wholly given to the receiving party and make the decision based on what seem fair to the couple. Or, a couple may choose to litigate the matter and spend a significant amount of money on attorneys and forensic accountants to determine how much should remain separate and how much should remain community.
The worst thing a couple can do is head off to court without considering whether, by the time all those high-priced professionals are paid, if it is worth going to court. Don’t allow your pride or desire for “justice” (which does NOT exist in family court) push you to spend $100k to fight over $25k. It just does not make sense. IT. NEVER. MAKES. SENSE.
If the inheritance money is agreed to be wholly or partially marital property, it may be subject to division during the divorce. The mediator can help the couple decide on a fair and reasonable distribution, taking into account factors such as the length of the marriage and each spouse’s financial contributions. As well as any promises made, plans carried out, relationship between the non-receiving spouse and the grantor of the inheritance (the now deceased).
Most of the couples I work with head companies, lead stressful teams, run a household, run marathons, basically, what I am trying to say, are my couples are all very capable people. It is the situation of divorce, and the emotions tied to the process, that prohibit them from believing they have the capacity to make these decisions without having to be told what to do by a judge. It is my job as their mediator to help them tap into their capacity and support them so they have the strength to make the hard decisions.
In mediation, the final agreement is reached through mutual consent. This means that, even if inheritance money is considered separate property, the spouses can choose to divide it if they agree to do so.
All mediators have their own style, however for myself, I practice client-centered mediation. As such, I am not here to pressure them to choose one way over another. It is always the client’s choice. I support and promote self-determination.
Child and Spousal Support
In some cases, inheritance money may influence decisions related to child support or alimony. The mediator can help the couple navigate these aspects by considering the financial situation of both parties.
This part of the conversation can be difficult to explain, hard to understand and even more challenging to accept. Again, it comes down to a truthful conversation and possibly, some education around what the rate of return may be on the inheritance money.
Clearly, this is geared towards those with a significant inheritance. We would not be inclined to insinuate that a $100k inheritance will support the receiver for years to come. Whereas, a $4 million dollar inheritance, may very well support the individual for the rest of their life, depending on age and standard of living.
In conclusion, the question of whether a spouse is entitled to inheritance money in divorce can be complex, and the answer depends on various factors. Divorce mediation provides a neutral and amicable platform for couples to address these issues. It encourages open communication, fair consideration of assets, and the flexibility to tailor agreements to their unique circumstances.
While divorce is never easy, mediation offers a more peaceful and cooperative path toward resolution, helping couples make informed decisions about their finances during a divorce – including any inheritance they may have received.
If you’re facing a divorce involving inheritance, consulting with a qualified mediator can be a step in the right direction, allowing you to navigate this challenging process with clarity and understanding.
Contact West Coast Family Mediation Center to learn how you can get started with divorce mediation and financial planning.