‘We’re all out of our 401(k) investments’: I lost my job and my home. Do I have a claim on my wife’s $200,000 inheritance?

I lost my house at public auction because I couldn’t cover the costs. I asked her wife to help her get a job, but things didn’t go her way. Now we finally live somewhere comfortable, we rent a house, and my wife finally has a job.

My question: If I spent all of my retirement savings to get through that difficult time, do I have a legal right to have her $200,000 inheritance split equally between me?

Divorce in Ohio

Related: My husband added my mother-in-law to the deed to our home 20 years ago. Now we are getting a divorce and she wants a third. Can I fight this?

Dear Divorce,

You have experienced a lot of financial loss, and you are about to go through the last thing I want. After 30 years of marriage and several years of home ownership, having to say goodbye to the former and give up the latter is a tough break. Given how difficult it is to get on the property ladder, it would have been better for me to live in a studio apartment with my wife and rent a house rather than let it go. But we all did the best we could with the resources we had at the time and eventually reached a place of stability.

The short and long answer to your question: Ohio is an equitable distribution state. This means that marital assets are distributed fairly, if not equally. An inheritance is considered separate property in Ohio unless it is used to benefit marital assets in some way, i.e. through commingling. For example, if it was used to renovate a home or was deposited into a joint bank account, the assets are no longer separate property through a process called conversion. This can easily happen. One letter writer used $142,000 of his $246,000 inheritance to pay off his mortgage.

If you have an inheritance and are going through a divorce, “don’t use the inheritance for regular expenses to replenish account balances,” according to Manning & Clair Attorneys At Law, a law firm in Willoughby, Ohio. “This could be problematic for separate property claims. This is because inheritance money must be ‘traceable’ (or identifiable) to prove to a court that it is separate property. … You must be able to prove that assets purchased through inheritance or inheritance retain a separate character from the rest of the marital assets.”

The final and perhaps bitter irony of your situation is that if you still owned property at the time of your divorce, you probably would have had to give up 50% of it, assuming any property purchased during the marriage. . Unless you entered into a prenuptial agreement before getting married, you may need to consider paying alimony in addition to other legal costs, given that you are generally the breadwinner in the relationship. The sooner you divorce, the sooner you can rebuild your wealth and start saving for retirement once again.

Obviously, taking money out of your 401(k) comes with penalties and should always be considered a last resort. But you are not the only one who has been forced that way. A previously released report found that 37% of workers took out loans or took early or hardship withdrawals from their 401(k) or similar retirement plans. It was conducted this year by the nonprofit Transamerica Retirement Research Center in partnership with the Transamerica Institute. Of these workers, 21% withdrew prematurely and/or withdrew due to difficulties.

Good luck with your next chapter.

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