Indiana Divorce Laws Regarding Inherited Real Estate

By Beverly Bird

Indiana divorce law is somewhat unique in that it doesn't protect a spouse’s separately-owned property from distribution in a divorce -- including inheritances. It is an equitable distribution state, so all assets are divided between spouses in a way the judge deems fair. But that’s where Indiana’s similarity to other equitable distribution states ends because judges have the right to distribute virtually everything either spouse owns.

Marital Property

Indiana defines marital property as anything a spouse receives, purchases or acquires up until the date of separation. Whether you inherit real estate prior to the marriage or during the marriage is immaterial. The only way your inheritance is unequivocally safe from distribution in a divorce is if you receive the bequest after you and your spouse officially separate.

Equitable Distribution Factors

Indiana equitable distribution laws begin with the premise that courts should divide all marital property evenly in a divorce. However, it also allows spouses to “rebut” or present compelling reasons why a 50/50 division isn’t fair. An acceptable compelling argument is the fact that your property was an inheritance. Although it’s technically “in the pot” for distribution, Indiana specifically instructs judges to consider the fact it is an inheritance when deciding which spouse to award it to. Particularly after a short marriage, judges are inclined to return inherited property to the spouse who received it by bequest. However, the law doesn't obligate them to do so.

Marital Misconduct

Indiana is a no-fault state, so its judges are not supposed to consider marital wrongdoing when they decide the terms of a divorce. Your spouse can’t argue that the court should award her your inherited real estate because you were abusive or committed adultery since the state doesn’t recognize grounds of cruelty or adultery. However, this doesn’t guarantee that marital misconduct won’t come into play. One factor judges may consider when deciding property distribution is “the conduct of the parties.” Generally, however, this relates to dissipation of marital assets. If you wasted an inordinate amount of marital funds through gambling or spending it on a paramour, a judge is more likely to divide the equity in your inherited property to compensate your spouse for the money you dissipated.

Use as Marital Home

Indiana doesn’t recognize the concept of “commingling” inherited property by using it for the benefit of the marriage, because it doesn’t recognize inheritances are separate property to begin with. However, if you used your inherited real estate as the marital home, this can complicate the situation. Indiana courts lean toward awarding the marital home to the spouse who has primary custody of the children. Therefore, if you and your spouse have been living in your inherited home and you have custody, your property is probably doubly safe. The court will most likely award it to you because it is both your inheritance and children’s home. However, if the court doesn’t give you primary custody, you may be in danger of losing your real estate to your spouse.

Overriding the Law

Indiana recognizes prenuptial and postnuptial agreements. Therefore, if you inherit real estate and your spouse agrees it should be yours alone, you can sign such an agreement and this will trump divorce law in the state. The same is true if you and your spouse reach a marital settlement agreement, so the court does not have to decide issues of property distribution for you.