One of the most often misunderstood aspects of divorce proceedings is the division of property and assets. California law simplifies it somewhat by dividing a couple’s property into two categories: separate property, which an individual owns, and community property, which is owned by both parties equally. But where does your inheritance fit into the picture?
Generally speaking, anything you acquire while married becomes community property. So does that mean that being named in or receiving inheritance during a marriage requires it to be split should you divorce? It can seem like a confusing issue at first, but it doesn’t have to be.
In this blog post, we discuss the issue of how California divorce laws treat inheritance. We’ve also detailed some unique circumstances that could lead to unexpected decisions.
How Does California Treat Property During Marriage?
How the law treats a couple’s property varies from state to state, but California keeps things rather simple. The short version is: generally, anything you owned before the marriage remains yours, but anything acquired during the marriage is considered joint property. When it comes time for divorce, joint property (or its value) gets split as evenly as possible.
What surprises some people is that the definition of property is pretty broad in this context. Besides physical objects, any wages, bank accounts, and investments also fall under this umbrella. Unless an agreement is reached beforehand or during divorce proceedings, both people legally own these things.
There is also the issue of commingling. Commingling occurs when one spouse helps the other with a separate property financially (such as making car payments). When this happens, the separate property becomes community property. Again, there’s no room for doubt who owns what if you keep documentation.
What Does Inheritance Fall Under?
Looking at the summary above, you could make a reasonable argument that inheritance received during the marriage becomes community property. However, it’s one of two property types exempt from community rules (the other being gifts). Therefore, unless it names your spouse (either specifically or as a family), they have no legal entitlement to it.
However, there are two unique situations where this isn’t always the case. Though California law is otherwise precise in handling divorce, these scenarios create murky entanglements with no simple resolution. If you can apply either of these cases to your inheritance, the issue may come down to a judge’s decision.
What you choose to do with your inheritance could change it to community property. Such a problem occurs when your inheritance is a sum of money. If you keep it in a separate bank account owned only by you, it will remain yours, and there will be no issue.
However, it becomes commingling if you put that money in a joint account. If there’s no other money in the account, its shared nature still gives your spouse legal access, making it co-owned. If there was pre-existing money in the account, telling where one sum ends and another begins is almost impossible.
Your inheritance can also become commingling if you choose to use it (in part or whole) to buy community property, such as a vehicle or real estate. You can argue that a set amount is yours with a shared account, though this tactic isn’t usually very successful. However, once you’ve spent the money on community property, those funds are no longer separate.
You can decide to convert your inheritance into community property at any point in your marriage. Your spouse will then have co-ownership, and if they still have it by the time of the divorce, a judge will divide it. The co-ownership overrides the original terms of inheritance in all circumstances.
Transmutation isn’t something that will spring up and surprise you, so you don’t need to protect yourself against it. However, some people have the mistaken notion that the start of divorce proceedings will nullify such co-ownership agreements. Therefore, if you’re thinking about divorce, it’s in your best interest to change these agreements beforehand, if possible.
Let Azemika & Azemika Guide You Through the Divorce Process
You know now how to protect your inheritance, but what about other aspects of your divorce? It can be an incredibly stressful experience for anyone. How do you navigate the situation without making costly mistakes?
With the help of Azemika & Azemika.
Our law firm is solely devoted to the practice of family law and is uniquely suited to help you with your divorce, custody disputes, issues with alimony and child support, and more. With a combined 56 years of experience, our partners dedicate themselves to serving people like you in the greater Bakersfield area. Contact us today to put the power of expertise on your side.