Arizona is among the U.S. states with community property laws. This means that, in general, all property acquired by either spouse during a marriage is considered jointly owned by both and divided equally if the marriage ends. It's a system built on the idea that marriage is a partnership and the fruits of that partnership are shared equally. However, there are exceptions to this rule, such as inheritances.

An inheritance received by one spouse is considered separate property, regardless of whether it's received before or during the marriage. This means it is not included in the pool of assets subject to division in a divorce. It remains the sole possession of the inheriting spouse. This distinction also applies to assets received through gifts from family or friends.

However, things can get a bit more complex if the inheritance gets mixed with community property. This is known as commingling. Let's say a spouse deposits their inheritance money into a joint bank account and the funds are then used by both spouses. Or perhaps the inheritance becomes part of a down payment on a house purchased in both spouses’ names. In these situations, the clear separation between inheritance and marital assets gets blurred. The inheritance may be deemed to have lost its separate identity and to have become part of the community estate, opening the door to division during a divorce.

To safeguard your inheritance from this result, you should do your best to keep it separate. This means maintaining a dedicated account or trust specifically for the inherited funds. Additionally, keep meticulous records. Clear documentation tracing the origin of the funds and demonstrating their separate nature throughout the marriage strengthens your position in case of divorce.

Note that while an inheritance itself is exempt from division, it can influence other aspects of a divorce judgment. For instance, the court might consider a substantial inheritance as part of the receiving spouse's overall financial resources when determining alimony payments.

Finally, if one spouse receives a significant inheritance after the divorce is finalized, there may be grounds to modify the original alimony order. This can be prevented if the spouses enter a settlement agreement that disallows using subsequent gifts or inheritances as grounds of modification. Retaining legal counsel familiar with Arizona's community property laws can be essential in working out appropriate protections.

At Clark & Schloss Family Law, P.C. in Scottsdale, we know how to handle the complexities of property division, including inherited assets, and to ensure your rights are protected during and after divorce. To schedule a free initial consultation, call 602-789-3497 or contact us online.