Dear Quentin,
I know that typically, during a divorce, one spouse isn’t entitled to money that the other inherited unless those funds were mixed with jointly held accounts. In my case, my wife received an inheritance after our marriage. However, I think she made a significant error; instead of keeping it separate, she deposited it into her personal account.
For approximately two decades—unknown to me—she had her salary directly deposited into the same account that contained her inheritance. Currently, she receives Social Security benefits, and the full amount continues to be deposited into that very account every month.
I’m still employed, and we’ve consistently submitted joint tax returns. Since no taxes are deducted from her Social Security benefits, my annual tax refund is approximately 60% smaller compared to what it would be if our joint tax return didn’t incorporate these benefits.
In the event of a divorce, would I have a claim to half of her individual account, considering that she has mixed their shared funds for two decades along with an inheritance? Would I also be eligible for half of her Social Security benefits, similar to how she would be entitled to half of my own when I start receiving them?
Husband in Texas
Related:
“He made me enroll in Social Security when I turned 62”: My spouse came into millions, yet he has never shared even a cent with me. In case I decide to end our marriage, could I receive any portion of his wealth?
Dear Husband,
Here’s some positive information for your spouse.
Your spouse needs to handle their inheritance wisely, particularly since your relationship seems to be at a low point and you’re thinking about getting divorced. It looks like they’ve managed things properly because you’ve been monitoring the flow of funds into and out of their accounts. You can hardly fault them for this, yet it doesn’t mean you have access to unlimited wealth.
Transferring funds from a shared marital bank account to an individual account holding your wife’s inherited money doesn’t mix your inheritance. Texas is among the nine community-property states, which also include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin.
Money moved from an individual’s bank account, which holds their own separate marital property, into a shared bank account is regarded as commingling. This could apply to inheritances, proceeds from specific personal injury cases, earnings before the marriage began, or items bought using funds sourced from these previously mentioned categories of separate marital property.
According to the legal experts at Hailey-Petty, which maintains practices in San Antonio and Austin, Texas, there are additional methods through which an inheritance might become mixed. They explain, “Should funds from an inheritance be utilized to buy or invest in assets held jointly or benefiting both partners, this action may result in those inherited funds being classified as communal property.”
The legal practice elaborates: “Should an inheritance substantially enhance shared assets—such as financing a substantial refurbishment of a co-owned residence—that part of the inheritance may then be deemed marital property. Furthermore,” they continue, “certain jurisdictions stipulate particular circumstances where an inheritance might be classified as marital property.”
Spousal benefits
An individual is not eligible for Social Security spousal benefits unless their spouse has filed for Social Security benefits first. The exact amount received will vary depending on when the spouse began receiving benefits—whether they claimed them at age 62, reached full retirement age, or maximized their payout by delaying up till age 70.
To clarify: Claiming spousal benefits of up to half of your spouse’s Social Security amount won’t impact their benefits. For instance, if you receive $1,500 and your spouse receives $5,000 monthly, you could claim based on her earnings record for a total benefit of $2,500 instead of $4,000; however, you wouldn’t collect both amounts—you’d take whichever one is larger. This means the individual with the higher benefit remains unaffected.
If you want to get spousal benefits following your divorce, you need to be aged 62 or older, single, and your marriage with your ex-wife should have lasted at least ten years. “Even if your former husband or wife has not yet stopped working, you may still file for benefits based on their record provided that you were legally separated from them at least two years prior to application,” states the Social Security Administration.
If you choose to stay married, you’re eligible to receive half of your wife’s benefits, provided she earns more than you do. The situation is reversed if you earn more; then, your wife becomes eligible for half of your benefits. This rule applies equally to both partners. Since neither of you has specified which one is the primary breadwinner, it’s unclear who will end up benefiting more from this arrangement.
According to the SSA, to qualify for a spouse’s benefits, “you must either be at least 62 years old or under 62 but caring for a child aged 16 or younger, or a disabled adult child who also receives benefits based on your spouse’s earnings.” The administration further notes, “Should you decide to claim these benefits before reaching your full retirement age, your payments will face a permanent reduction.”
In the end, her inheritance is completely secure.
The Moneyist regrets that he is unable to reply to letters personally.
Additional entries from Quentin Fottrell:
My partner lost their cool: After purchasing a $20,000 Toyota SUV with financing, my spouse insisted we pay it off right away. Was this a poor decision?
“I find myself caught between feuding siblings”: After my father’s passing, he left behind a record showing $80,000 in outstanding debts. Are my brothers legally obligated to settle these payments?
“This contradicts my values and principles”: My dad excluded my sisters from inheriting his six-figure estate. Should I contest this?
Check out
The Moneyist’s exclusive Facebook community
, where members assist in tackling the most challenging financial dilemmas of everyday life. Share your queries or contribute insights to the newest Moneyist articles.
By sending your queries via email to The Moneyist or sharing your challenges on the The Moneyist Facebook group, you consent to having them posted anonymously on the platform.
When you submit your story to Dow Jones & Co., the publisher of , you acknowledge and consent to us potentially using your story, or modified versions thereof, across various media and platforms, even through external entities.
