How to Trace a Commingled Inheritance for a Divorce

By Beverly Bird

The longer you’re married, the more likely you are to commingle or mix your legally separate property -- such as an inheritance -- with marital assets. The laws in every state exempt inheritances from distribution to your spouse in a divorce, but this is a sure thing only if you keep the asset consistently titled in your own name. This takes a concerted effort over time, especially with "liquid" inheritances, such as cash or investment accounts. Luckily, most states allow you try to undo your mistakes by creating a paper trail that proves the money was initially yours.

Establish your asset was indeed an inheritance intended solely for you. You can usually prove this very easily with a copy of the will or trust documents that bequeathed the money to you.

Prove you established sole ownership of your inheritance after you took possession of it. If you inherited cash, you might have deposited it into an investment or bank account. Your opening account statement will show the deposit. Ideally, it will equal the amount of your inheritance. If you didn’t deposit your entire inheritance, you may have to provide receipts for what you bought with those monies. This may be difficult or impossible after years have passed, but if you can produce receipts equal to the amount you didn't deposit and if they're dated at the time you received your inheritance and opened the account, the court may rule that whatever you bought with the money is your separate property as well.

Identify any withdrawals. If you made direct payment of marital expenses from your inheritance account, you’ve probably lost that money. However, if you transferred money to a marital bank account, you may be able to trace it and protect some of it if that marital account still holds the money. You can establish the link by providing a copy of the statement showing the withdrawal, corresponding with a statement from the marital account showing the deposit. Repeat the procedure of matching account statements to all transfers you made over the years.

Ascertain what you and your spouse spent from your inheritance money on marital needs. If you and your spouse never spent the money you withdrew and deposited in the marital account, the deposit you made will likely be seen as your separate property, assuming you can show matching statements. However, if you did spend some of the money, a principle referred to as “marital property out first” usually applies. This means that any money left in the account is usually yours. For example, if you transferred $5,000 into a joint account that already held $5,000 and if you then spent $7,500 of that money in the course of your marriage, courts usually recognize the remaining $2,500 as your separate property. You'll lose half of the transfer you made to the marital account, but the balance is usually yours if you can show that the $5,000 deposit came from your separate account.

Isolate marital contributions if commingling occurred because you added marital funds to your separate inherited account. Income is a marital asset so if you deposited your paychecks, match the deposits on the statements with your pay records. Depending on how long ago the commingling took place, you may be able to get old paychecks from your employer. If you can segregate the deposits and subtract them, the balance in the account is usually identifiable as your inheritance.

Create a spreadsheet or timeline detailing the dates and amounts of all transactions made to and from your inherited money. Next, attach your documents as exhibits. You have the burden of proof to convince the court your inheritance remains your separate property so the easier you make it for a judge to visually connect the dots, the more likely it is that you'll be successful.


Not all states share the same laws regarding commingling. For example, your state might not recognize the “marital property out first” theory. If you’ve commingled your inheritance, consider enlisting the help of an attorney to make sure you retain as much of your separate property as possible.