What Happens to Inheritances in a California Divorce?
In California, inheritances are treated differently than many other assets, which is why they can quickly become a source of confusion and conflict during a divorce. Understanding how inheritances factor into property division considerations in the divorce process can help you protect what is yours and approach your divorce with greater confidence.
Community Property vs. Separate Property
California is a community property state. The law presumes that the property from during marriage through the date of separation is community property. This means that any property acquired during the marriage belongs to both spouses and is divided equally in a divorce. Separate property, on the other hand, is not divided. Separate property includes property acquired before the date of marriage and after the date of separation, but as well we gifts given to one spousal individually and inheritances received by one spouse (even if received during the marriage).
What Qualifies as an Inheritance?
For the court to treat property as a separate property inheritance of one spouse, it must clearly be received from a decease person and intended solely for one spouse. In general, if this criteria is met, the inheritance is considered separate property and not subject to equal division. However, there is a critical caveat to be aware of: the inheritance must retainer is separate property character. If an inheritance becomes mixed with marital assets, or in other words “commingled,” it may lose its separate property characterization and be subject to equal division between the spouses.
The Risk of Commingling
An inheritance can lose its distinctive separate property character if it becomes commingled with community property to the point that it can no longer be clearly traced, or it was used to cover joint living expenses.
Common examples of commingling include depositing inherited funds into a joint checking or savings account, using inherited money to pay share household expenses, and applying inherited funds toward jointly owned property. Once an inheritance is deeply intertwined with marital assets, it may be treated as community property and subject to division in a divorce.
Protecting Your Inheritance
To protect your inheritance during divorce you must be mindful to take proper precautions when the inheritance is received. Endeavor to keep clear records that establish that the inheritance really is an inheritance, from whom it was received. If you receive a gift, keep clear records of the relationship or nature of the gift, gift giver, and recipient. Also keep a record that shows how the inheritance stayed separate from the couple’s marital assets, such as by opening a separate savings account.
Being proactive from the moment the inheritance is received can make all the difference later. If you expect to receive or already received an inheritance and you are concerned about its impact in a future or present divorce, speaking with legal counsel can help you take the proper steps to protect your inheritance’s separate property status.
Contact Cardwell Steigerwald Young LLP
If you need guidance or strategic legal counsel in your divorce and property division, contact a respected San Francisco divorce attorney with Cardwell Steigerwald Young LLP today.
