One of the most trying aspects of divorce often involves figuring out how to divide and allocate marital assets. Before you can begin to discuss how assets are divided, you have to identify which assets must be allocated. In California, property is classified as either community property or separate property. Community property must be shared equally, while separate property is retained entirely by each spouse.

What happens when you receive an inheritance? Is that money considered community property? Will you be required to split that inheritance with your spouse if you decide to get a divorce? In most situations, you’ll be able to keep your inheritance without having to worry about the impact of a divorce.

What is an Inheritance?

When someone dies, their property and assets must be transferred to others. Many times, the deceased will have executed a will to map out how they want their property to be divided after death. When you are chosen to receive property from someone who has passed away, it’s called inheritance.

You can receive an inheritance even if your loved one died intestate or without a will. In California, certain family members are automatically in line to receive property from a loved one’s estate after they die. Spouses and children are first in line to inherit property.

Most Property Obtained During Marriage is Community Property

As a general rule of thumb, most property obtained by either spouse during the marriage will be considered community property. This includes things like income and wages, intellectual property, real estate, furnishings, and cars. When you get divorced, both spouses are considered to have an equal ownership right to these assets.

There are exceptions to this rule. Gifts and inheritances directed to one spouse are not community property.

Inheritance is Considered Separate Property

Did you inherit property before you got married? It’s considered separate property under California law. Did you inherit property while you were married? It’s also considered separate property under California law. This means that it is yours, and yours alone, if and when you get a divorce. Your spouse will have no ownership rights to that inheritance.

Again, there are exceptions to this general rule.

Transmutation: Inherited property may be considered community property if you assigned ownership of that property to your spouse. For example, let’s say that you inherited a house when your father passed away. You decide to add your spouse’s name to the deed. Your spouse now has an ownership interest in the home. If you get divorced, it will probably be considered community, rather than separate, property.

Commingling: Sometimes an inheritance can involve a large sum of money. If you keep this money in a bank account, separate from other marital funds, it will be easy to maintain its status as separate property. However, things can get complicated if you put that cash in an account with other money that is accessible by both you and your spouse. Commingling funds can convert your separate property to community property. If you get a divorce, you’d have the burden of proving that it is still your separate property.

Always keep detailed records and notes about any inheritances you receive. Your spouse may try to claim an ownership interest in those assets if you get a divorce. You can protect your inheritance by showing a judge that the assets were given to you, and you alone, and that you never intended to transfer ownership rights to your spouse. An experienced Los Angeles family law attorney can help you protect your assets. Call Fernandez & Karney for a free consultation today.