Dividing property in a divorce is rarely straightforward, especially when it involves inherited property. Many people assume an inheritance is always off-limits during divorce proceedings, but that is not always the case. In Texas, the line between marital and separate property can become blurred depending on how you handle an inheritance during the marriage.
Understanding how the law treats inherited assets can help you protect your financial future if divorce becomes unavoidable.
Does Texas Consider Inherited Property Marital Property?
In Texas, property is categorized into two types: marital property and separate property. Marital property includes most assets and income acquired during the marriage. Separate property, on the other hand, refers to assets owned before marriage, inheritances, and gifts.
When a spouse receives an inheritance before marriage, that property is generally classified as separate property. The same principle applies to inheritance during marriage, even if one spouse receives it while the marriage is still in effect. In theory, the inheritance belongs solely to the recipient.
Things can become complicated when inherited property gets combined with marital property. For instance, if someone puts inherited money into a joint bank account or uses it to purchase a family home, the law may no longer consider the inheritance separate property. Texas law refers to this as transmutation. That means property that started as separate can change and be treated like marital property if it is mixed or used together with shared assets.
The burden of proof lies with the spouse claiming that the property is separate from the marital estate. Courts require clear evidence, often through tracing inheritance methods, to demonstrate the origin of the asset and its management over time.
When Inherited Property May Be Divided in Divorce
Inheritances usually start out as separate property, but they can end up divided in a divorce if they lose that status. A few situations can make things complicated:
- Inheritance Used for Joint Assets – If you spend inherited funds on remodeling a marital home or paying off shared debts, courts may treat them as part of marital property.
- Commingled Assets – Mixing inheritance money with joint accounts without careful recordkeeping can make it difficult to prove which funds are separate.
- Equitable Distribution Considerations – While Texas follows community property principles, judges sometimes weigh fairness if one spouse indirectly benefited from inherited property during the marriage.
For example, if you use inherited money to start or grow a family business that both spouses manage, the court may evaluate the business’s fair market value when dividing marital assets.
Documentation plays a key role in these situations. A financial affidavit and supporting records help demonstrate how you kept the inheritance separate – or whether it became tied to marital finances. Without strong records, the court may divide property more broadly.
How to Protect Inherited Property in Divorce
Fortunately, there are proactive steps spouses can take to protect inherited property in divorce:
- Maintain Separate Accounts – Keep inherited money in its own account, never mixing it with marital income or joint accounts.
- Use Legal Agreements – A prenuptial agreement or postnuptial agreement can clarify how to handle inherited assets in the event of divorce.
- Keep Records – Maintain clear documentation of how you received the inheritance, including legal documents, account statements, and receipts, to ensure a transparent record. This makes tracing inheritance easier in court.
- Avoid Transmutation – Be cautious about using inherited property for joint purchases or household expenses. Once commingled, separating it later can be challenging.
- Consult a Divorce Attorney Early – Legal guidance is crucial for protecting non-marital assets and preventing unintentional missteps.
If divorce proceedings begin, an attorney can help argue why your inheritance should remain classified as separate property.
Why Legal Guidance Matters
The rules surrounding inherited property in divorce can feel overwhelming. One spouse may assume an inheritance is untouchable, only to learn that years of shared use have blurred the lines. Others may find themselves defending their right to retain inherited assets while their spouse argues for a share of them.
Every situation is unique, and due to these complexities, it is essential to work with an experienced divorce attorney.
At BB Law Group PLLC, we help clients in The Woodlands and surrounding communities protect what matters most during the divorce process. If you have questions about inherited property or other aspects of property division, let us guide you through the process and protect your interests. Call (832) 534-2589 to schedule a consultation, or message us today to request an appointment at a time that works for you.
