When does inheritance count as income for alimony?
Q. I was just served with a contempt complaint and summons and am frankly baffled. At the time of our divorce, I agreed to define my income for alimony purposes as everything I earned from my employment including bonuses and overtime as well as everything that I earn as investment income from my inheritance. We structured it that way because my father passed shortly before the divorce, and we knew I was going to inherit certain stocks once his estate was sorted out which were not being divided as marital assets.
Fast forward to last year my mother and her second husband passed within a week of each other. Although I did not anticipate it happening, I inherited their home in the Outer Banks which, according to Zillow is worth $2.5 million. I suspect I inherited the property because I keep all of the grandchildren together, oversee our annual family reunions and keep the family close which was very important to my mother. I have no plans to sell or rent the house. My mother’s trust pays all the expenses for the house for the next 10 years so the burden does not fall on me.
My ex is arguing that I received $2.5 million and owe her $500,000 in support on that “income.”
A. While your ex gets an A for creativity, I do not believe a judge will find you in contempt because you did not willfully violate a clear and unequivocal court order. You should have a lawyer read the definition of income in your agreement on which your support is based to be certain, but as you have described it, the mere ownership of real estate is not, itself, income on which support is based.
Given the creative argument she is trying to make, be prepared for her to also argue that the payments for the expenses of the property is income to you as well. Get all of your ducks in a row with the trustee so you can go to court and prove that you do not actually receive any funds to support the house but, rather, the trustee is paying everything directly. If you have not already done so, you should change the address on all of the bills associated with the house to the trustee’s name and address.
Fair warning, however, if you decide to rent out the property in the future, you probably will have an obligation to pay alimony on any rental income you receive for the duration of your alimony obligation.
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