If you’re getting a divorce and you either received an inheritance during your marriage or you anticipate one while your divorce is pending in the courts, you’re probably wondering if you’ll have to split it with your spouse.
California is a community property state, which means both spouses are equally entitled to the marital estate, so this is a reasonable thing to wonder about. The question is, “Are inheritances considered to be community (marital) property in California?”
In regard to property division in a California divorce, only community or marital property is subject to division; separate property is not divided in a divorce. Community property includes all assets and income acquired during the course of a marriage regardless of which spouse earned the money or whose name happens to be on the title. Separate property, which is not divided, includes property owned before the marriage as well as gifts and inheritances received by one spouse alone during the marriage.
Beware of Commingling Inheritances
If a spouse receives an inheritance in their name alone during a marriage, it is considered separate property, which is NOT divided in a divorce. However, if an inheritance is commingled with marital funds, for example, if it’s deposited into a joint bank account and used to pay marital bills or debts, then the inheritance can lose its separate status.
Using an inheritance to pay down a couple’s mortgage, to pay off marital debts, or to renovate the marital residence can be problematic as well. If a spouse’s inheritance is used to pay off marital debts or improve the marital residence, it can lose its separate status.
If you anticipate an inheritance and you don’t want it to convert to community property, our advice is to deposit it into a bank account with only your name on it and avoid engaging in any of the above activities which could alter its status as your separate property.
If you have further questions about how inheritances are treated in a California divorce, contact The Law Office of David A. Martin & Associates.