Leaving us with a legacy is a final way for parents and grandparents to show their love and ensure we are provided for after they are gone. Sometimes, stipulations are attached to the inheritance, but typically, it can be used however you wish.
But what happens if you and your spouse divorce? Will they get half of your inheritance?
Marital and separate assets
According to California’s community property laws, most assets acquired during the marriage are to be divided equally. This includes savings accounts, your home, vehicles, investment properties and retirement accounts.
Separate assets aren’t divided. Each spouse retains what they had when they entered the marriage. Gifts and assets gained through inheritance are usually considered separate property. Therefore, your inheritance would not normally be divided between you and your spouse if you were to divorce.
However, almost every rule has exceptions. The subject of inheritance and marital property is no different. There are certain conditions under which an inheritance may be considered a part of the marital assets, including:
- The inheritance is mixed with joint assets, such as depositing into a bank account you share with your spouse.
- You agreed to transmute the property from separate to community, either verbally or in writing.
- The inheritance was used to pay for marital assets, such as a down payment on a home or using the money for remodeling.
You may be in a happy marriage with no intentions to divorce. Still, you should take steps to ensure your inheritance remains separate property, such as:
- Open a separate account for inherited funds.
- Keep documentation of how you received the funds and how you spent it.
- Consider having either a prenuptial or postnuptial agreement that specifies how inheritances will be treated during a divorce.
You may wish to share everything with your spouse, but it’s also essential to remain vigilant. This can help ensure that your inheritance stays with you, just as your deceased loved ones wished.