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 Arizona, which is a community property state, property acquired by a spouse through inheritance before or during the marriage is typically considered separate property and not subject to division in the event of a divorce. This includes real estate, money, stocks, bonds, art, jewelry, and antiques. However, any increase in value of the inherited property, such as appreciation of real estate or dividends from stocks, may be considered community property unless there is a valid prenuptial or postnuptial agreement stating otherwise. An exception to this rule occurs when inherited property is commingled with community property, such as depositing inherited funds into a joint bank account or titling inherited real estate in a shared entity. In such cases, the separate property may lose its separate character and be treated as community property, making it subject to division upon divorce.