Inheritances are often deeply personal, and most have significant amounts of both financial and emotional wealth. For these reasons, protecting an inheritance during marriage and divorce is essential. It is not uncommon for a California resident to file for divorce and then discover that his or her inheritance is considered community property, and as such subject to property division.
Unlike other types of assets, if a person receives an inheritance during his or her marriage, it is not automatically considered community property. In most cases, it will be the heir’s separate property. However, it is possible for an asset that is considered separate property to actually make the switch to community property. It is relatively easy for a person to treat his or her inheritance in a manner that causes it to become community property.
Depositing an inheritance into a joint bank account used for marital expenses is a common way to lose separate property status. This is referred to as commingling. While the person who received the inheritance might think nothing of this at the time and may even feel happy to contribute to the household’s needs, he or she may end up feeling very differently during divorce. Commingled inheritances are not only difficult to divide, it can be an extremely emotional process for the person who will see those funds go to an ex-spouse.
In most cases, it is best to keep inheritances received both before and during marriage as separate as possible. This can be difficult for some California couples who prefer to maintain joint accounts. For those who are unsure of the benefits of protecting inheritances during property division, seeking guidance from an experienced attorneys could be helpful.