My wife put her paycheck into a bank account with her inheritance. Do I now own 50% of those funds?

“Am I entitled to half of her Social Security income?” (Photo subjects are models.) – Getty Images/iStockphoto

Dear Quentin,

I understand that, in a divorce, a spouse is not entitled to money that their spouse inherited if those funds were not commingled in a joint account. I’m in a situation where my wife inherited money after we were married. But I believe she made a big mistake: She put it into her own account.

For about 20 years — unbeknownst to me — she had money from her paycheck deposited into the same account that held her inheritance. Now she’s on Social Security, and the entire amount is also deposited into that same account each month.

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I’m still working, and we’ve always filed joint tax returns. No tax is being withheld from her Social Security income, so my tax refund each year is about 60% less than it would be if our joint tax return did not include the Social Security income.

If we were to divorce, would I be entitled to half of her separate account, given that she has commingled joint income for 20 years with the inherited amount? Am I entitled to half of her Social Security income, just as she would be entitled to half of mine once I begin taking it?

Husband in Texas

Money transferred from a joint bank account into a separate bank account with your wife’s inheritance does not have the same commingling effect. – MarketWatch illustration

Dear Husband,

I have some good news — for your wife.

Your wife should manage her inheritance appropriately, especially given that your marriage has seemingly seen happier days and you are considering a divorce. She appears to have done just that, as you have been following the paper trails of money going in and out of accounts. I can’t blame you for that, but you’re not sitting on a golden goose.

Money transferred from a joint marital bank account into a separate bank account containing your wife’s inheritance does not commingle your inheritance. Texas is one of nine community-property states, along with Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington and Wisconsin.

Cash transferred from a bank account with separate marital property into a joint bank account is considered commingled. Separate marital property might include an inheritance, funds from certain personal-injury claims, money earned prior to the marriage or assets clearly purchased with money from those aforementioned sources.

There are other ways an inheritance could be commingled, according to the law firm Hailey-Petty, which has offices in San Antonio and Austin, Texas. “If inheritance funds are used to purchase or invest in property that is titled jointly or used for the benefit of both spouses, this can also lead to the inheritance being considered marital property.”

The law firm continues: “If inheritance is used to significantly improve marital property — like funding a major renovation of a jointly owned home — that portion of the inheritance can become marital property. Some states,” it adds, “have specific conditions under which an inheritance can be considered marital property.”

Spousal benefits

A person cannot receive Social Security spousal benefits until that spouse claims Social Security themselves. The amount the person receives would depend on whether the spouse started claiming at 62, or whether that person waited until full retirement age or maxed out their benefits by waiting until age 70 to claim.

Just so we’re clear: If you claim spousal benefits of up to 50% of your wife’s Social Security, it would not affect her benefits. If you get $1,500 and your wife gets $5,000, you can claim on her record and get $2,500, but you don’t get $4,000; you get the higher of the two benefits. The person receiving the higher benefits will not be affected.

If you wish to receive spousal benefits after your divorce, you must be at least 62 years old and unmarried and you must have been married to your ex-wife for at least 10 years. “You can apply for benefits on your former spouse’s record even if he or she hasn’t retired, as long as you divorced at least two years before applying,” according to the Social Security Administration.

Should you decide to remain married, you’re entitled to receive 50% of your wife’s benefit, assuming she is the higher earner. If you are the higher earner, the same is true for your wife. It’s an equal-opportunity policy. As you don’t say who is the higher earner, it’s impossible to say who would (or will) ultimately benefit.

To be eligible for a spouse’s benefits, “you must be 62 years of age or older or any age if you have a child who is younger than 16 in your care or has a disability and is entitled to benefits on your spouse’s record,” the SSA says. “If you choose to receive your spouse’s benefits before you reach full retirement age, your payment will be permanently reduced.”

Ultimately, your wife’s inheritance is as safe as houses.

More columns from Quentin Fottrell:

‘My husband blew a gasket’: I bought a $20,000 Toyota SUV using financing. My spouse said, ‘Pay it off immediately.’ Did I get a bad deal?

‘I’m trapped between warring siblings’: My late father left a ledger with $80,000 in unpaid loans to my brothers. Can they be forced to pay?

‘This flies in the face of my morals and ethics’: My father cut my sisters out of his six-figure estate. Should I push back?