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 Connecticut, which is an equitable distribution state, property acquired by either spouse during the marriage is considered marital property and is subject to division upon divorce. However, inherited property, whether real estate or personal property, is generally considered separate property and is not subject to division. This includes property inherited before or during the marriage. Any increase in value of the separate property, such as appreciation of real estate or dividends from stocks, may be considered marital property if it resulted from the efforts or contributions of either spouse during the marriage. Income generated from separate property, like rental payments, can also be treated as marital property. To ensure that such property remains separate, spouses can enter into written prenuptial or postnuptial agreements. If separate property is commingled with marital property, it may lose its separate status and become subject to division upon divorce. For example, if inheritance funds are deposited into a joint bank account or if inherited real estate is titled jointly, it may be considered marital property. It's important for individuals to manage and document their assets carefully to maintain the distinction between separate and marital property.