How Does Inherited Property Affect My New Jersey Divorce Settlement?
One of the primary activities of any divorce proceeding is tallying up the property and assets of each party in order to determine what is subject to equitable division. While some assets such as income generated during the marriage are clearly part of the marital estate, other types of property involve more nuanced questions of fact and law in determining whether they must be divvied up in a divorce. Inherited assets, in particular, can be tricky. A recent New Jersey appellate court decision illustrates how family courts will treat inherited property in a divorce. Read on for an explanation of the recent case, and contact a knowledgeable New Jersey equitable property division attorney with any questions.
Court rules that income derived by inheritance is still inheritance, not subject to equitable division
The matter of Rosen v. Rosen concerns a divorced couple and the equitable division of their assets. The defendant-husband’s father died during the marriage, and the husband inherited a one-third interest in the father’s estate along with his brothers. The estate included a trust, which the family converted into an LLC that periodically distributed income to each brother. The defendant in Rosen co-mingled the distributed income he received into accounts he jointly held with his wife (the plaintiff) during the marriage, and the funds were used to pay for joint expenses. The plaintiff never acquired any ownership interest in her husband’s LLC.
After trial, the family court ordered that the plaintiff was entitled to fifty-five percent of her former husband’s payments from the LLC as part of the distribution of marital assets. The defendant appealed, claiming that because his ownership interest in the LLC was derived from inheritance, it should not be subject to equitable division. However, commingling exempt property with marital property can convert exempt property into marital property. Additionally, separate property can be considered in determining an alimony award.
The New Jersey appeals court agreed with the defendant. Inherited property is not subject to equitable distribution. Income generated from an exempt asset like inheritance is likewise exempt from distribution. Jointly using income generated from an exempt asset does not trigger the commingling rule. The LLC was separate property acquired by way of inheritance and is not subject to equitable distribution.
Contact a New Jersey Family Law Attorney
If you’re in need of compassionate, experienced, and talented legal help with a divorce or property division dispute in New Jersey, contact the Union offices of family law attorney John B. D’Alessandro at 908-964-0102.