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 Alabama, which follows the equitable distribution model, property acquired by either spouse before the marriage or by inheritance or gift during the marriage is generally considered separate property and not subject to division in the event of a divorce. However, any increase in value of the separate property or income derived from it, such as appreciation of real estate or dividends from stocks, may be considered marital property and thus subject to division, unless there is a prenuptial or postnuptial agreement stating otherwise. It's important to note that if separate property is commingled with marital property, such as depositing inheritance money into a joint bank account or jointly titling inherited real estate, it may lose its separate property status and become subject to division upon divorce. Therefore, how property is managed during the marriage can significantly impact its classification as separate or marital property in Alabama.