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 Wyoming, which follows common law property rules, property acquired by either spouse before the marriage or by inheritance or gift during the marriage is typically considered separate property and not subject to division in the event of a divorce. However, any increase in value of the separate property, such as appreciation of real estate or dividends from stocks, may be considered marital property, especially if the increase can be attributed to the efforts or contributions of both spouses during the marriage. Income generated from separate property, like rental payments, could also be treated as marital property. To ensure that such property remains separate, spouses can enter into prenuptial or postnuptial agreements that clearly outline the ownership and treatment of such assets. If separate property is commingled with marital property, it can lose its separate status and become subject to division upon divorce. This can happen if inheritance funds are deposited into a joint account or if real estate is co-titled in a way that blends separate and marital assets. Therefore, it is crucial for spouses to maintain clear records and titles to preserve the separate nature of inherited property if they wish to prevent it from becoming marital property in the event of a divorce.