The Supreme Court of Georgia recently heard an interesting case regarding separate property in a Georgia divorce. Shaw v. Shaw, S11F1586 (2012). In that divorce case, the only issue was equitable distribution of certain property,particularly property in Florida inherited from Husband’s mother, and two accounts established by the Husband with inherited funds. Id. From the outset, the Husband directed that the property be deeded to him and his wife as tenants in common and established both accounts in the name of him and his wife, with a right of survivorship. Id. at 3-4. As a result, the trial court characterized these assets as martial property and divided them equally between the parties. Id. at 1.
The Husband appealed contending that the trial court erroneously characterized these inherited assets as martial property. Id. at 2. The Husband argued that the assets were established with funds he inherited from his mother and, thus were separate property not subject to equitable division. Id. Husband further argued that the Wife never contributed to the value of these assets, nor were they commingled with other marital funds so they should not have been transformed into marital property. Id. The Supreme Court of Georgia disagreed, holding that the accounts were “transformed into marital property when Husband gave Wife an ownership interest” on the accounts, specifically by putting her name on the accounts/deed. Id. at 3 and 4.Thus, the trial court properly characterized these assets as marital and there was no error in dividing them between the parties.
This case highlights the importance of how you treat inherited funds after you receive them. Inherited property doesn’t always equal separate property if it has not been treated as such.