Your family members want to give you every opportunity possible in life. When your parents or grandparents died, they may have named you as a beneficiary and left you a substantial inheritance.
Whether you inherited a family business, the home where your grandmother lived her whole life or just a substantial amount of money from someone’s estate, you want to protect that inheritance and use it in a way that honors your loved one.
Unfortunately, when you get married, you are at risk of your spouse trying to lay claim to your inheritance if you ever get divorced. Is your inheritance always separate property in a California divorce?
State law does consider an inheritance separate property
In theory, your inherited assets will be separate property. Even if you inherit them while already married, unless your spouse is also a named beneficiary, those assets are solely yours. However, property division isn’t always a black and white process. There are often many shades of gray involved, including claims that you commingled your inheritance.
Your spouse could claim that your commingling entitles them to a share of your inheritance. Anything that gave them unfettered access to or control over your inheritance could constitute commingling. What you do in kindness to make your spouse feel secure could potentially hurt you later if you divorce.
If you gave them a debit card that allowed them to withdraw money from an inherited account or if you allowed them to live in an inherited home, they may ask the courts to treat your inherited assets as community property.
How do people protect their inherited wealth?
There are numerous ways for a beneficiary from someone’s estate to protect their inherited assets if they get divorced. The easiest may be to execute a marital agreement designating the inheritance as separate property. A prenuptial or postnuptial agreement can allow you to live in an inherited home with your spouse while still protecting that home as your separate property if you eventually divorce.
Being careful about how you hold assets, possibly placing them in a trust, can also be a solution for those eager to avoid commingling inherited property. Taking the right steps before you get married or when you receive an inheritance is important, but there are also ways to protect your inheritance when you file for divorce.
Addressing your inheritance and your property division concerns are important when you plan for a California divorce.