If a spouse inherits real property (real estate) or personal property (money, stocks, bonds, art, jewelry, antiques, etc.) before or during marriage, it is generally separate property (not marital property) and is not subject to division upon divorce in equitable distribution/common law property states or in community property states. But any appreciation or increase in the value of such separate property (e.g., real estate, stocks) and any income from such separate property (rental payments, stock dividends) may be marital or community property—unless the parties agree otherwise in a written prenuptial or postnuptial agreement.
An important exception to this general rule is the situation in which separate property from an inheritance is commingled with marital or community property—by placing funds from both sources in the same bank account, for example, or holding (titling) real estate from both sources in the same entity (limited liability company, family limited partnership, etc.).
In Texas, which is a community property state, property inherited by a spouse before or during the marriage is typically considered separate property and is not subject to division upon divorce. This includes real estate, money, stocks, bonds, art, jewelry, and antiques. Any appreciation in value of the separate property, as well as any income derived from it (such as rental payments or stock dividends), may be considered community property unless there is a written prenuptial or postnuptial agreement stating otherwise. However, if separate property is commingled with community property, such as by depositing funds into a joint bank account or titling real estate in a way that mixes separate and community assets, it may lose its separate property status and become subject to division upon divorce. It is important for spouses to maintain clear records and titles to preserve the separate nature of inherited property if they wish to prevent it from becoming part of the marital estate.
