Inherited Property and Divorce

Wednesday, December 14, 2011

    There has recently been a major change in the statutes relating to inherited property when there is a divorce.  This change relates to assets that are inherited by one spouse during marriage.

    There is a rebuttable presumption that assets acquired during marriage are subject to equitable division.  In most cases, there is a sense that, in order for the division to be equitable, the division should be equal.  However, many people do not feel this is true when the assets were inherited by one spouse or the other.

    In many situations, when an asset or property is inherited, the person who formerly owned the asset or property intended to benefit his or her own child, not the person that child is divorcing.

    A recent case, Olesberg and Olesberg, 206 Or App 496, rev den 342 Or 633 (2007), held that the presumption of equal contribution applied to inherited property.

    A new Oregon law, Senate Bill 386, (Chapter 306, Oregon Laws, 2011), changes this presumption.  Now, property or assets that are received by gift, inheritance, or beneficiary designation are not subject to the presumption that the property or assets were acquired as a result of the equal contribution of both spouses.
    What that means in simple terms is that, if you inherit something, and if you keep that separate and do not co-mingle it or work it into the family finances, you have a significantly better chance of being able to keep that asset or property after you divorce.

    It is important to remember that ultimately ALL property division is still subject to an analysis by the court of what is just and proper.

    It is also important to remember that it is still very possible to prove that, even if only one spouse was named in a will, the intent of the person who passed on was to benefit the entire family, or the spouse of the person named.  The burden of who has to prove the intent of the person who died has shifted, however.  It is now the spouse who was not named in the will who must prove that he or she was intended to also have benefitted.