When you are contemplating a divorce in Alabama or are going through the divorce process, it is important to be aware of the role of inheritance in deciding alimony payments. In general, inheritance is not considered marital or community property while dividing assets in an Alabama divorce. Moreover, there can be certain cases in which it affects the alimony payments. This primarily depends on how and when the inheritance was set up and the manner in which the proceeds were used.
Inheritance is a Non-marital Asset in Alabama
Inherited monies are generally considered to be non-marital assets and not subject to property division in an Alabama divorce. Monies could be converted to marital assets or commingled; in which case the inheritance would get divided. Non-marital assets can be converted to marital assets through an inter-spousal gift. This makes it subject to equitable distribution.
Commingling of Inheritance with Marital Assets
Transmutation is used for describing a property that gets converted into a marital asset from one’s separate property. For instance, a property becomes a marital asset even if it was received as inheritance by one of the spouses but registered in both partners’ names after marriage. This property would be subject to division.
Couples that don’t manage their affairs correctly may risk losing inherited wealth even if they have a premarital agreement in place. There are several ways of protecting an inheritance during a divorce. Experts suggest working with family law attorneys to better protect your wealth during a divorce.
Effect of Inheritance on Alimony Payments
Expected inheritance is not used for deciding alimony awards. This is because you cannot actually count on the receipt of the money. There are several things that can change – the person planning on leaving the inheritance may require expensive care which would deplete their assets or there may be a family fallout and they cut you off completely. Hence, expected inheritance is never taken into account while determining alimony payments.
In relation to this, if the spouse has already received the inheritance, it may play a role in the alimony award. This is true whether the inheritance is received by the spouse that pays the alimony or receives it. Inheritance, especially when it’s a significant amount, is capable of producing ongoing income, which can be used for meeting overall expenses.
Lower earning spouse that receives an inheritance would now have more money to be self-supportive. They may have a lesser need for spousal support payments. Conversely, if the higher-earning spouse gets the inheritance, they would have more money to support the lower-earning spouse. Receiving an inheritance can change the dynamics of alimony payments even when the divorce is finalized.
Either spouse can trigger a modification of the alimony award after a qualifying event. The lower-earning spouse may no longer be considered a dependent. Pertaining to this, this depends on the size of the inheritance. The spouse receiving spousal support payments can also ask for a modification if the paying spouse received an inheritance. They would need to demonstrate additional financial need though.
Protecting Inheritance During a Divorce
A great way of protecting inheritance if the divorce is impending is by having it set up as a trust. The trust should be under the category of “health, maintenance, and support.” This type of trust is set up for protecting the person inheriting the money from creditors. A creditor will not be able to sue the receiver for the inherited money.
The spouse receiving the inheritance can let the trustee know that they don’t need any distributions or very few distributions for the time. This will prevent an accidental commingling of assets as the divorce approaches. By not accepting distributions, you can also prevent alimony payments from being affected.
Many couples accidentally commingle funds which cause them to lose out on their inheritance. It’s best to hold off on the inheritance if your marriage is struggling and you are unsure whether it will survive. You should also consult with a family law attorney to understand other ways of protecting your interests.
Inheritance After Divorce
Generally, once you are divorced, any property that you acquire is yours alone unless the divorce settlement agreement or divorce judgment provides otherwise. This is true for property acquired after separation as well in certain states. Post-divorce inheritance may affect the amount of alimony or child support depending on your unique circumstances.
Spouses receiving support payments as alimony or child support have the option of going back to court and requesting a change. This is also known as a modification of the alimony payments. They would need to prove and justify the need for the additional amount. Based on this, this is allowed only if there is a significant change in the financial situation since the divorce. Where inheritance is concerned, an ex-spouse can move the court for a modification if the amount inherited is substantial.
Strong Legal Representation is Available from Accomplished Divorce Attorneys in Alabama
When you or your ex has received an inheritance, it is best to have a skilled and resourceful divorce attorney on your side who has the necessary experience in dealing with inheritance matters if you or the other party has received an inheritance.
In Alabama, the laws related to inherited assets are complicated. It takes a seasoned divorce attorney to ensure that your legal rights remain protected. At Alsobrook Law Group, we are happy to provide you with a free consultation. Call us at 334-737-3718 or reach us online.