Recent Changes to Oregon's Treatment of Inheritances Upon Divorce

November 17, 2012 (Press-News.org) The Oregon Court of Appeals recently issued an interesting ruling involving the receipt and use of a substantial inheritance during a 15-year marriage in a case called In the Matter of the Marriage of Morton and Morton. At the time of their divorce, the husband was age 63 and his wife was 48. Throughout the marriage, he had worked as a lumber broker and typically earned more than $150,000 per year until his income dropped sharply in 2008 due to the recession.

That same year, the wife's father died, leaving her an inheritance worth nearly $1.25 million. Both parties proceeded to spend the inheritance money freely. In addition, the husband was allowed to invest part of the money in the stock market and lost $180,000.

When the couple separated in 2010, only about one-third of the inheritance was left. The husband sought a share of the remaining inheritance, arguing that it was part of the marital estate and should be divided equally. The trial court concluded that the wife had rebutted Oregon's presumption of equal contribution and awarded her the remaining inherited funds even though she had commingled most of what remained with their other assets.

Since the Morton case was heard, Oregon has changed its divorce statute so that the presumption no longer applies to inherited assets that are not commingled. Effective January 1, 2012, the law states that whenever the court renders a divorce judgment, it may provide in for the division or other disposition between the parties of the real and/or personal property "as may be just and proper in all the circumstances."

In determining the division of property between the spouses, the following principles apply:
- A retirement plan or pension shall be considered as property
- The court shall consider either party's contributions as a homemaker as a contribution to the acquisition of marital assets
- Except as otherwise provided in the statute, there is a rebuttable presumption that both spouses have contributed equally to property acquisitions during the marriage, whether that property is jointly or separately held
- Property acquired as a gift by one party during the marriage (including by devise, bequest, operation of law, beneficiary designation or inheritance) and held separately on a continuing basis is not subject to the presumption of equal contribution

Issues of property division in divorce often require clear assessment of financial and legal principles. An Oregon divorce attorney can help a client understand the full implications before filing for dissolution, separation or annulment.

Article provided by DeBast, McFarland & Richardson, LLP
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