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 Hawaii, which is not a community property state but rather follows the principle of equitable distribution, if a spouse inherits real property or personal property either before or during the marriage, it is typically considered separate property. This means that such inherited property is not subject to division upon divorce. However, any increase in value of the separate property, such as appreciation of real estate or stock, as well as any income derived from it, like rental payments or dividends, may be considered marital property and thus subject to division, unless there is a written prenuptial or postnuptial agreement stating otherwise. An exception to this rule occurs when separate property is commingled with marital property, which can happen if the inherited funds are mixed in the same bank account with marital funds, or if real estate is held under joint titles or within the same legal entity. In such cases, the separate property may lose its separate status and be treated as marital property during a divorce.