What Happens To Inheritances In A California Divorce?

Inheritance can be one of the trickiest assets to deal with during divorce. While California law makes a clear distinction between community and separate property, things often get complicated when gifts or inheritances are mixed into marital finances. In this article, we’ll unpack…

• How inherited property is regarded during a divorce in California.
• How an inheritance can become community property
• What documentation is needed to protect your rights as a beneficiary.

Is Inherited Property Considered Community Property Or Separate Property In A California Divorce?

Under California law, inheritances are considered separate property. That means they belong solely to the person who received them. The challenge arises when inheritance funds are used in a way that mixes them with community property. For example:

• Parents gifting money during the marriage that is used to remodel a jointly owned home.
• Grandparents contributing a down payment on a house purchased in both spouses’ names.
• Inheritance funds being deposited into a joint account and spent for shared purposes.

In these cases, tracing the original source of the money is necessary, causing the inheritance to be treated as community property.

Documentation is key. Even how a check is written can affect whether the money is later treated as separate or community property. When someone passes away and leaves an inheritance directly, that property is generally straightforward and remains separate. Issues mainly arise with pre-inheritance gifts or commingled funds.

How Do California Divorce Courts View Future Or Expected Inheritances?

Expected inheritances (think being named in a relative’s will) do not count as community property. Whether you receive the inheritance during or after the marriage, it remains your separate property.

However, complications can arise if the inheritance functions as a couple’s primary source of income. For example, if a husband lived off his inheritance and his wife stopped working, the court may consider imputing the inheritance as income when deciding spousal support during a divorce.

The cleanest way to avoid conflict in these situations is often through a prenuptial agreement.

How Can I Prove That An Inheritance Is Separate Property?

The biggest challenge isn’t proving the inheritance, it’s proving that it stayed separate. Problems usually come from commingling, that is, using inheritance money to buy or improve community property.

An increasingly growing point of contention involves 529 college savings accounts. These accounts may be funded by grandparents but held in a parent’s name, creating confusion during divorce. Parents often disagree about who controls the account, even though it was funded for the benefit of the children.

The bottom line: separate funds must remain clearly separate to stay protected.

What Records Should I Keep To Protect Inheritance Claims During A Divorce?

Keep thorough documentation whenever inheritance funds are received or used. Important records include:

• Checks or transfers clearly showing the funds were made out to you alone.
• Bank statements proving that inheritance money is kept in a separate account.
• Records showing how your inheritance funds have been used.

The best safeguard is to never mix inheritance money with joint accounts or community property purchases unless you are prepared to share it.

How I Help Clients Balance Emotional Attachment To Inherited Property With The Legal Realities Of Divorce

Emotional attachment to inherited property can be strong, but courts deal in legal realities. If you add your spouse’s name to the inherited property, it will likely become community property.

California law does provide some reimbursement options, however. For example, if you use $1 million of inheritance funds to buy a house in both spouses’ names, and the house later sells for $4 million, you may be entitled to reimbursement of your original $1 million. But your spouse will likely still share in the appreciation.

Ultimately, protecting inheritances is about making clear decisions from the start and understanding that emotional value does not outweigh legal rules in court.

Still Have Questions? Ready To Get Started?

For more information on inheritance and divorce in California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 456-2040 today.