Why Your Inheritance Should Not Be In A Joint Account
Did you know that inheritances are normally exempt from equitable distribution in a divorce? Did you know that this exemption is frequently inadvertently waived when inherited funds are co-mingled with marital property? A recent Florida 4th District Court of Appeal opinion illustrates this common problem.
In the case of Sorgen v. Sorgen, this exact problem occurred to the dismay of the wife. The wife had inherited a one-third interest in a home prior to her marriage. After the marriage, the wife’s sisters separately sold their interest in the home to the wife. There was a dispute about where the funds came from to purchase the sisters interests. However, it wasn’t that dispute that led to her problem. The house was eventually sold and the proceeds deposited into a joint account owned with the husband. During the intervening 10 years or so, the parties used the proceeds to buy and sell stock. When the husband filed for divorce, the wife moved the remaining funds from the joint account into her separate personal account.
At trial, she tried to argue that either all of the house proceeds or one third of the house proceeds were not subject to equitable distribution. Unfortunately, she was unable to overcome the statutory presumption of a gift found at Florida statute 61.075(6)(a)(3). This statute states: “all personal property titled jointly by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset. In the event a party makes a claim to the contrary, the burden of proof shall be on the party asserting the claim that the subject property, or some portion thereof, is non-marital.” The statute goes on to say that the burden of proof to overcome the gift presumption is by “clear and convincing evidence.”
What does this mean? It means that when spouses inherit assets, they should never deposit those assets into a joint account. Doing so will create a presumption that there was a gift intended and then the asset will be subject to equitable distribution with a high probability that the asset will be distributed 50-50.
In this case, the wife was doing what many spouses do, putting everything into one big pot. Doing that will destroy the statutory provisions that inheritances are not subject to equitable distribution. Lesson learned!
Image courtesy of freedigitalphotos.net by David Castillo Dominici