California is a community property state for marriage. Under this type of law, married couples become a “community” and any income or assets brought into the marriage once it’s begun belong to that community. Under this law, divorcing couples must equally divide all community property during their divorce. This includes real property like houses and land, and all other property and assets acquired by either spouse during the marriage such as cars, furniture, artwork, antiques, appliances, collectibles, bank accounts, investment accounts, and pensions. Even a bank account in only one spouse’s name becomes joint property during the marriage as does all debts regardless of which spouse’s name appears on the account.
There are only two exceptions to community property in California—gifts given to one spouse, and one spouse’s inheritance.
Why Is an Inheritance During Marriage Not Community Property
While California law considers each spouse entitled to an equal share of all assets acquired during a marriage, it also recognizes a family member’s right to leave an inheritance to their own loved one without it becoming subject to 50/50 division with a spouse during a divorce. For this reason, an inheritance remains the separate property of the individual whether they inherit before or after the marriage unless the inheritance is specifically left to both spouses or the family.
While in most cases an inheritance remains separate property there are some ways a spouse can make a claim for division under specific circumstances.
When Can an Inheritance Become Community Property and Subject to Division?
Just as the division of assets and property is one of the most contentious issues in a divorce—second only to child custody—it’s also one of the most confusing issues for attorneys and courtroom judges to untangle. Though on the surface it seems it should be simple to determine that one spouse’s inheritance belongs only to that spouse, the matter of inheritance becomes more complex under the following circumstances:
- When one spouse adds earnings to an account for funds inherited by a spouse
- If a spouse inherits money and puts it into a joint account used by both spouses to deposit and withdraw funds
- When one spouse inherits real estate property but the other spouse invests a significant amount of money and time in making improvements to the property
- If one spouse inherits real estate property or a vehicle and adds the spouse’s name to the deed or title (considered transmutation of property)
- When a spouse spends inherited money to buy community property such as a family home or vehicle
If you are considering a divorce in California, speak to an experienced attorney before attempting to hide or disguise assets and find out what you can do to protect separate property, including an inheritance.
Tips For Keeping an Inheritance Separate Property in California
If you receive an inheritance meant for you alone, you can protect the inheritance from the possibility of becoming joint property in a divorce by remembering the following:
- Keep all documents relating to the inheritance
- Open a separate account for the inheritance
- Don’t use inherited funds to purchase a family home or vehicles
- Don’t use inherited money to pay off joint debts
- Avoid commingling an inheritance asset by allowing a spouse to invest money into the property
Asset and property division is always a complex matter during a divorce, especially for divorcing spouses with many separate and joint assets An experienced divorce attorney can help you navigate the issues of property division, including understanding separate inheritance.