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Bar News - November 23, 2007


Family Law: Don’t Ignore Inheritances in a Divorce


Carolyn Garvey


Charles G. Douglas


House Bill 47, pending in the legislature, would repeal one of the 15 factors courts consider when dividing marital assets in a divorce.  If enacted, HB 47 would eliminate from court division all inheritances or gifts a spouse receives during marriage irrespective of when they were received, the amount/number received, or how the parties treated the inheritances or gifts prior to divorce.  This overly simplistic treatment of inheritances and gifts will likely produce dramatically unfair property divisions.

           

Presently all assets of every kind must be “considered” for division in divorce.  The applicable statutes already recognize that in dividing property, inherited assets may be a factor in an unequal division of property.

           

By way of background, in 1992, the Legislature enacted a statute which creates a rebuttable presumption that an equal division (50/50) of a marital estate is “equitable.”  However, this same statute recognizes that an equal division is not always appropriate or equitable and enumerates 15 factors for a court to consider in determining fairness.

           

These 15 considerations include, among others, the value of any property acquired prior to the marriage; the value of any property acquired by gift or inheritance; any significant disparity between the parties’ contributions to the marriage; the actions of either party during the marriage which contributed to the growth in value of property owned by either or both and any other factor that the court deems relevant.

           

Notably, the 15 factors enumerated in our statutes were the same factors relied upon by New Hampshire courts to decide property allocations before the enactment of the statute in 1992.

           

Further, it remains well-settled law that trial courts in New Hampshire have broad discretion in dividing marital property.  Said another way, the trial court is already vested with the authority to “carve out” an inheritance or gift received by one spouse if the equities of the case, taking all facts into consideration, justify such a result.

           

The major problem with HB 47 is that its naïve simplicity fails to recognize the complexities of how spouses treat such assets, especially in long-term marriages.  For example, assume a spouse receives a substantial inheritance or gift early in the marriage which is used to purchase the marital residence.

           

Fast forward and 25 years later the spouse who received the inheritance files for divorce.  If HB 47 is passed, then one spouse would be left with absolutely no interest in the home which is potentially the main asset of the marriage.  The effect of HB 47 would, in this instance create a windfall for one spouse and be financially devastating to the other.

           

A violent and abusive spouse can have a get-out-of-jail-free card for years of outrageous conduct because the business and home the wife lived and worked in were inherited by her husband decades before.  Under HB 47, he gets to keep it all.

           

Effectively, without notice, a spouse’s legal rights in marital property are being retroactively changed without notice or warning if HB 47 passes.  Luckily, RSA 21:37 provides protection for spouses because it says the repeal of an act shall in no case affect any act done, or any right established before the time when repeal takes effect.

           

The problems with HB 47 are highlighted when compared to the laws governing inheritances.  For instance, what if a spouse inherited millions and wanted to remain married but cut his/her spouse out of the will?  Under New Hampshire law, a spouse cannot completely disinherit a spouse by leaving him/her out of the will unless the couple signed a valid prenuptial agreement that demonstrates such a mutual intent.  As a result, a surviving spouse is generally entitled to up to a one-third share of the estate.  Therefore, even for estate purposes the receipt of an inheritance or gift is not automatically excluded.

           

A prospective spouse who wants to protect his or her existing or anticipated inheritance after marriage and divorce can do so through a prenuptial agreement.  Premarital or civil union planning takes care of the issue through such agreements, thus making HB 47 unnecessary.

           

HB 47 is not fair, but instead promotes selfishness.  It is harmful to society’s goal of a sharing marriage or civil union.  It should be voted inexpedient to legislate.

 

Charles G. (Chuck) Douglas is an attorney with Douglas, Garvey & Leonard in Concord and author of NH Practice:  Family Law (2 volumes).  Carolyn S. Garvey, also of Douglas, Garvey and Leonard, specializes in marital law.

 

 

 

 

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