How Inheritances Are Treated During Divorce in Indiana?
Ryan M. GardnerRyan M. GardnerIn Indiana, the treatment of an inheritance during divorce often surprises people. Unlike some states that automatically exclude inheritances from marital property, Indiana follows a “one-pot” theory of property division. This means that all property owned by either spouse—regardless of when or how it was acquired—is initially presumed to be part of the marital estate and subject to division.
That presumption includes inheritances, even if one spouse received the inheritance before the marriage or solely in their own name. However, the analysis does not end there. Indiana law allows a spouse to rebut or challenge the presumption of an equal division by presenting evidence that an unequal distribution would be just and reasonable under the circumstances or that the inheritance has been kept separate, distinct and treated differently from other marital property.
When evaluating whether an inheritance should be awarded primarily or entirely to the recipient spouse, courts consider several factors. These include when the inheritance was received, whether it was kept separate or commingled with marital assets, how it was used during the marriage, and each spouse’s contributions to the marital estate. For example, an inheritance that was placed into a joint account or used for family expenses it would be more likely that the court would treat the inherited property like all other marital property and equally divide it rather than an inheritance that had been kept in a separate account and never commingled with the other spouse.
Courts also always examine the overall economic circumstances of each spouse, including earning capacity and financial need. While an inheritance does not automatically remain separate property, Indiana judges have broad discretion to award it disproportionately if fairness requires.
Ultimately, inheritance issues in an Indiana divorce are highly fact-specific. Careful documentation and legal guidance are often critical in determining how inherited assets will be treated.
