Inherited Assets and Divorce: What Happens When the Money Was Deposited Into a Joint Account?
As an Illinois divorce attorney in Schaumburg, I often meet individuals who are shocked to learn that what began as a personal inheritance may no longer be considered separate property. Under Illinois law, how inherited money is treated during a divorce depends heavily on what happened after the inheritance was received. One of the most common and misunderstood scenarios arises when inherited funds are deposited into a joint account with a spouse.
Inheritance is typically considered non-marital property under 750 ILCS 5/503(a)(1) of the Illinois Marriage and Dissolution of Marriage Act. This statute defines marital and non-marital property and clearly states that property acquired by gift, legacy, or descent is non-marital. However, if those inherited funds are mixed with marital funds, such as through a joint bank account, the classification can change entirely. This process, known as commingling, can significantly affect who keeps what in a divorce.
Understanding how commingling works and how to protect inherited funds can make a substantial difference in the outcome of a divorce settlement.
When Inherited Property Becomes Marital
Under 750 ILCS 5/503(c)(1), non-marital property can become marital if it is commingled with marital property in a way that it loses its separate identity. For example, if inherited funds are deposited into a joint checking account and used to pay household expenses, mortgage payments, or family vacations. In that case, those funds may be presumed to have been given to the marital estate. Illinois courts often treat this as a gift to the marriage, meaning both spouses have an ownership interest.
The longer the funds remain mixed in a joint account, the harder it becomes to prove that they should still be considered separate. The court examines the intent of the spouse who received the inheritance and whether there is clear evidence that the funds were intended to remain separate.
Proving That Inherited Funds Are Non-Marital
It is possible to argue that inherited assets remain non-marital even if they were deposited into a joint account, but strong documentation is critical. Tracing the funds is the key. The process involves showing the exact path the inheritance took, from the initial receipt to the current balance, without interruption or confusion.
For example, if $50,000 in inherited funds were deposited into a joint account but immediately used for a down payment on a home titled solely in the inheriting spouse’s name, there may be a valid argument that the funds retained their non-marital character. However, if those funds were gradually spent on shared expenses or merged with income deposits, the claim becomes much harder to sustain.
Bank records, wire receipts, estate documentation, and financial statements are crucial forms of evidence. In many cases, I work with forensic accountants to trace transactions when clients need to establish that their inheritance was never intended to be shared.
Reimbursement Claims Under Illinois Law
Illinois law allows for reimbursement when non-marital property contributes to the marital estate. Under 750 ILCS 5/503(c)(2), a spouse can request reimbursement if non-marital funds were used to benefit the marriage. However, reimbursement is not guaranteed. The court will deny the claim if the contribution was considered a gift or if the funds cannot be adequately traced.
For example, if inherited funds were used to remodel a jointly owned home, reimbursement might be available if documentation shows the exact contribution. But if the funds were used sporadically for everyday expenses, the court may determine that they were voluntarily contributed to the marital estate and therefore non-reimbursable.
Why Intent Matters
Intent is a critical factor. Illinois courts have consistently ruled that depositing inheritance funds into a joint account creates a presumption that the owner intended to gift those funds to the marriage. Overcoming that presumption requires compelling evidence, such as written correspondence, a postnuptial agreement, or clear records, showing the intent to keep the funds separate despite temporary commingling.
As a divorce attorney, I always emphasize the importance of maintaining separate accounts for inherited funds. Once commingled, recovering ownership rights becomes extremely difficult, even with excellent records.
How To Protect Inherited Assets Before And During Divorce
For anyone receiving an inheritance while married, a few steps can help preserve its non-marital status:
- Deposit funds into a separate account under the inheriting spouse’s name only.
- Avoid using inherited funds for marital expenses such as bills, vacations, or joint investments.
- Keep detailed records showing the origin of the inheritance and how it was used.
- Consider a postnuptial agreement confirming that the inheritance will remain non-marital property.
Taking these steps before a divorce is filed can prevent costly litigation later. Once funds are mixed, it may take expert testimony to unravel their origins—and even then, results are uncertain.
How Courts Divide Commingled Assets
When a court finds that inherited money has been commingled beyond recognition, it treats the entire account as marital property. That means both spouses are entitled to an equitable share. Illinois courts follow the equitable distribution principle under 750 ILCS 5/503(d), which means assets are divided fairly, not necessarily equally. The court considers multiple factors, including each spouse’s contribution to the marriage, economic circumstances, and future earning potential.
If tracing is possible, courts may allocate portions of the account back to the inheriting spouse. But if tracing fails, the inheritance is effectively lost to the marital estate.
The Importance Of Legal Representation
Disputes over commingled assets are among the most complex issues in divorce law. The burden of proof falls on the spouse claiming non-marital ownership, and courts are strict about documentation. An experienced divorce attorney can analyze account records, apply statutory standards, and present evidence persuasively to protect rightful property interests.
In my Schaumburg practice, I frequently see divorces complicated by inheritance disputes that could have been avoided with early legal guidance. Even in contested cases, preparation, documentation, and sound strategy can make all the difference.
Frequently Asked Questions About Inherited Assets And Joint Accounts In Illinois
What Happens If An Inheritance Is Deposited Into A Joint Account?
Under Illinois law, inherited funds placed in a joint account are presumed to have been gifted to the marriage. This makes it marital property unless the inheriting spouse can prove a different intent with clear evidence.
Can Commingled Funds Be Traced Back To Maintain Non-Marital Status?
Yes, but tracing requires strong documentation. Detailed records showing the flow of funds from the inheritance to their current use are essential. Without them, the court will likely treat the funds as marital property.
Does It Matter If Only Part Of The Inherited Money Was Mixed?
Even partial commingling can cause problems. If the court determines that the non-marital portion cannot be identified separately, it may treat the entire amount as marital. Clear separation and documentation are critical.
Can A Spouse Be Reimbursed For Using Inherited Funds For Marital Expenses?
Possibly. Under 750 ILCS 5/503(c)(2), a spouse can seek reimbursement if non-marital property was used to benefit the marital estate. Still, only if clear records exist and the court does not find that the contribution was intended as a gift.
Are Gifts And Inheritances Treated The Same Under Illinois Divorce Law?
Yes. Both gifts and inheritances are considered non-marital property when received individually. However, both can lose that status if commingled or transferred into a joint account.
Can A Prenuptial Or Postnuptial Agreement Protect Inherited Assets?
Absolutely. These agreements can specifically state that any inheritance received by one spouse remains non-marital property, even if commingled with other property. This provides a strong legal safeguard recognized under Illinois law.
Does Intent Really Matter In These Cases?
Yes. Courts closely examine the intent behind depositing inherited funds into a joint account. If it appears that the inheriting spouse intended to share the funds, the court will classify them as marital property.
Is It Ever Possible To Recover Inherited Funds After Commingling?
It can be, but only with excellent records and sometimes expert forensic accounting. The more time that passes and the more the funds are used for joint purposes, the less likely recovery becomes.
How Do Courts Typically Handle Disputes Over Commingled Funds?
Courts apply Illinois statutes and case law to determine whether the funds can be traced. If tracing fails, the inheritance is treated as marital. If successful, the court may reimburse or award the non-marital share accordingly.
What Should Someone Do Immediately After Receiving An Inheritance During Marriage?
The safest approach is to deposit the funds into a separate account in the recipient’s name only and avoid using them for marital purposes. Documentation and clear intent are the best protection under Illinois law.
Call The Law Office Of Fedor Kozlov For Experienced Divorce Representation
Disputes involving inherited assets and joint accounts require careful handling and strategic legal representation. At The Law Office of Fedor Kozlov, each case is prepared with attention to detail and a deep understanding of Illinois family and property division laws.
For experienced legal counsel, contact our Chicago divorce lawyer at the Law Office of Fedor by calling (847) 241-1299to schedule a consultation. The firm represents clients in Schaumburg, Chicago, and throughout Cook and DuPage Counties, helping individuals protect what matters most when facing divorce.
