In Missouri, property acquired during a marriage is presumed to be marital property. There are some exceptions to this presumption, including property which is gifted or inherited. However, separate property may be converted into marital property depending on how it is handled upon receipt, and during the marriage, so it is important to understand how to best protect inherited property.
Depositing funds into a joint account or purchasing an asset in joint names (like a home) may be deemed by the court to be a gift of separate property to the marriage. To keep inherited property separate, it must continue to be owned separately and segregated from marital income or property. Titling the property or accounts in the recipient’s name alone is a good start, as is keeping any inherited accounts indicating those were inherited. For example, some IRAs will transfer accounts after death indicating “inherited account from XYZ trust”, which can be helpful. Any accounts held in an individual’s name, holding separate property should not receive deposits of marital income (such as wages). A separate asset that becomes too comingled with marital property may lose the distinction of being separate property.
Additionally, because income on separate property is marital, directing the distribution of dividends or interest out of the separate account can further avoid an argument that the account is marital, or has a marital component. In the event there is comingling of separate and marital property, it may become necessary to conduct a forensic tracing of the assets in the account which is a time consuming and potentially costly exercise.
For additional questions about the designation of marital and separate property in the context of a divorce action, please contact a Sandberg Phoenix family law attorney for a consultation.
