If you divorce, will a future inheritance from your parents be taken into account in determining the award to your spouse? In Oregon, the answer is generally no.
In this post, “inheritance” means the share or amount to be received under a parent’s will or revocable trust at death. In lawyer language, a future inheritance is commonly referred to as an “expectancy.”
Beginning in 1929, Oregon courts have held that an expectancy under a will (of a living person) is not “property” to be divided in a divorce. See, e.g., Jerman v. Jerman, 275 P2d 915 (Or. 1929). In reaching this conclusion, the courts have noted that the potential beneficiary has no legally enforceable rights, and the person creating the will retains full ownership and can revoke the will at any time.
Until 2009, Oregon courts had not ruled on divorce ramifications of a potential inheritance under a revocable trust. By way of background, a revocable trust (sometimes also known as a “living trust”) is a will substitute that directs the disposition of the decedent’s property at death. Like a will, it can be amended or revoked at any time. A key difference is that a revocable trust also governs the administration of the decedent’s assets during life.
In the case of Githens v. Githens, 204 P3d 835 (Or. App. 2009), the husband in a divorce proceeding was a beneficiary under his mother’s revocable trust. The mother was afflicted with dementia and had questionable capacity to amend her revocable trust. The wife contended that her husband’s future inheritance was marital property to be divided between them. (The key asset to be inherited was the house they had lived in for the last 15 years.) The Oregon Court of Appeals disagreed. The court reasoned that an expectancy under a revocable trust has no practical difference than an expectancy under a will, and both should receive the same treatment. Neither is “property” to be taken into account in a divorce proceeding.
In conclusion, even if you are certain to receive an inheritance from a parent, whether under a will or revocable trust, your expectancy is only marginally relevant in a divorce proceeding unless the parent has died.