Is Inheritance Marital Property in a Divorce?
Divorce already comes with enough uncertainty. Add the question of whether an inheritance will be split, and the stakes feel even higher. For many people in Colorado, if one spouse inherits property during the marriage, the question of whether that inheritance is marital comes up once a divorce is underway.
Under Colorado Revised Statutes §14-10-113, how an inheritance is classified depends on when it was received, how it was handled, and whether it was mixed with marital assets. Sometimes the answer is straightforward. Other times, it turns into one of the most contested parts of a divorce.
Knowing how courts approach these situations can make the difference between keeping your inheritance and watching it be divided. Let’s break it down in a way that’s clear, practical, and grounded in Colorado’s property division laws.
How Colorado Divides Property in Divorce
Colorado is an equitable distribution state. This means the court divides marital property in a way it considers fair, not necessarily fifty-fifty.
Marital property generally includes anything acquired during the marriage, such as wages, real estate purchased together, vehicles bought with joint funds, or retirement contributions made during the relationship, regardless of whose name is on the title.
Separate property refers to assets you owned before marriage or received individually through a gift or inheritance, such as a personal savings account opened before the wedding, jewelry given only to you, or a home deeded solely in your name by a family member. And separate property has to be kept separately, not commingled in a joint account or used to buy jointly titled property during the marriage
When Is Inheritance Marital Property in Colorado?
Inheritance as Separate Property in Colorado
If you received your inheritance before getting married and you’ve kept it in your own name, it is generally excluded from marital division. Even inheritances received during the marriage can remain separate if they are kept completely apart from marital assets. But any increase in value of any of your separate assets is marital property in Colorado. That means if you have a rental home that you bought before the marriage and you’ve kept it titled only in your name throughout the marriage but it’s increased in value, that increase is something that will have to be determined and divided in the divorce.
For example, if you inherited money from a grandparent and placed it in a savings account solely in your name, never depositing marital earnings into it, that inheritance is more likely to be treated as yours alone in a divorce, except of course for the interest on that savings account, which in Colorado, becomes marital. The key is that it remained untouched by marital funds or shared use.
How Inheritance Can Become Marital Property
The challenge arises when inherited funds are mixed, or “commingled,” with marital assets. Once money is deposited into a joint account used for household expenses or combined with other marital funds, it can lose its separate status and, more often than not, does. For example, if you put a downpayment on a house that you then titled jointly, that house is a presumed gift to the marriage under Colorado law.
The same thing happens with joint debt. Even if the original source was an inheritance, the court often determines in a divorce that the asset as belonging to both spouses because it was used for marital benefit.
The same applies to spending inheritance on recurring household bills. If your inheritance paid for groceries, utilities, or vacations during the marriage, it’s virtually impossible to argue that the funds were meant to remain separate.
The Concept of “Increase in Value”
As stated above, Colorado law allows for the division of any increase in value to separate property during a marriage. That means even if your inheritance itself remains separate, the growth in its value could be shared.
Proving That Inheritance Is Separate Property
If you want to keep an inheritance from being divided, you will need evidence. That starts with keeping original documents, such as a will, trust paperwork, or probate filings. These show the source of the asset and that it was given to you alone.
It also helps to maintain a paper trail. Bank records, account statements, and property deeds can prove the inheritance was kept separate from marital funds. Without this documentation, it becomes much harder to claim that an asset should be excluded from the marital estate.
How Colorado Courts Approach Inheritance Disputes
Courts look at a range of factors when deciding if an inheritance remains separate or becomes marital property. These include the timing of the inheritance, how it was used during the marriage, whether it was mixed with other funds, and the intent shown by the inheriting spouse’s actions.
Testimony from both parties can influence the outcome, but financial tracing by an expert can carry significant weight. If a forensic accountant can clearly track the inheritance from its source to its current form, the court is more likely to classify it as separate.
Practical Steps to Protect Your Inheritance
If you want to keep your inheritance separate in a Colorado divorce, follow these steps consistently:
- Keep the funds in a separate account – under your name only, never mixed with marital accounts.
- Avoid using the inheritance for marital expenses – such as mortgage payments, utility bills, or shared purchases.
- Maintain complete documentation – from the original will or trust paperwork to bank statements and property deeds showing the funds’ history.
- Consider a prenuptial or postnuptial agreement – these agreements are covered by the Colorado Uniform Premarital and Marital Agreements Act (CRS §14-2-301 to §14-2-313). A valid agreement can make it far easier to prove your inheritance should remain separate if the marriage ends.
What If You’re the Non-Inheriting Spouse?
From the other side, you may believe your spouse’s inheritance became marital property because it was used for joint benefit or increased in value due to marital contributions. In that case, your divorce attorney can request financial records and, if necessary, hire a forensic accountant to trace where and how the funds were used.
The court will look at how you contributed, whether through money, labor, or other efforts. It will then decide if those contributions are enough to include part or all of the asset’s value in the marital estate.
What happens if I inherit during divorce proceedings?
In Colorado, an inheritance received after the divorce is filed is usually considered separate property under CRS §14-10-113, meaning it is not included in the marital estate. However, how you handle that inheritance during the proceedings can affect its status. If you deposit the funds into a joint account, use them for marital expenses, or commingle them with shared assets, the court may treat some or all of it as marital property.
Keeping it in a separate account under your name only and maintaining clear documentation of when and how you received it are essential steps to preserve its separate status. Courts will also look at whether the inheritance impacts other financial issues, such as temporary support or the division of debts.
How does inheritance affect spousal maintenance?
Inheritance itself does not change whether an asset is classified as marital or separate property under Colorado law, but it can influence the court’s approach to spousal maintenance under CRS §14-10-114. When determining maintenance, the court considers each party’s financial resources, earning capacity, and ability to meet reasonable needs.
A significant inheritance could be viewed as increasing the recipient’s financial ability to support themselves, which may reduce or eliminate the need for maintenance. On the other hand, if the inheritance is modest or tied up in a non-liquid asset, it may have little impact. Judges review the size, accessibility, and intended use of the inheritance to ensure any maintenance order is fair and reasonable.
Protecting Inheritance in a Colorado Divorce
If you’ve been wondering, “Is inheritance marital property?”, the answer often depends on how the asset has been handled during the marriage. Keeping it separate, documenting its source, and avoiding shared use can help protect it.
At The Drake Law Firm, a Golden, Colorado family law firm with over a decade of experience handling complex property division cases, including disputes over inheritance and separate assets. Our legal team regularly represents clients in Golden, Lakewood and surrounding Colorado communities divorce cases involving high-value estates and contested classifications of property.
If you are facing divorce and have questions about your inheritance, The Drake Law Firm can help you review your situation and prepare a strategy that fits Colorado’s property division rules. Every case is unique, and the earlier you get guidance, the more options you may have to safeguard what was meant for you. Schedule a consultation today.