Going through the process of dividing assets in a divorce can be very troubling for any person in this situation. The feeling of losing property and money to an ex can be scary and upsetting, and it is only natural for people to try and hold on to every item and dollar that they feel is rightfully theirs.
In California, the courts observe community property laws. This means that all the assets and property earned during a marriage belong equally to each spouse. However, the lines between "yours," "mine" and "ours" can be blurred when it comes to an inheritance.
In many cases, inheritances are left to one person, not a married couple. Whether this money is left to an individual before or after a marriage, in general, the money is considered separate property and therefore may not be split up in a divorce.
However, if the intended recipient of an inheritance is unclear or undocumented, it could be considered to belong to a married couple rather than just one spouse.
An inheritance could also shift from being considered separate property to community property if it is used to support shared interests. This means that if an inheritance is deposited into a shared account or used to buy a home with both spouses names on a title, that money or the goods purchased with that money could be eligible for division.
In order to protect an inheritance, recipients can work with an attorney to explore the options for addressing an inheritance before or after getting married. This solution could include a pre- or post-nuptial agreement, setting up a trust or ensuring that the inheritance is put in a separate account and is not used to purchase community property.
Protecting an inheritance during a divorce can be about much more than just financial security; it can also be about preserving the interests and intentions of the person who gifted the money.
Source: The Wall Street Journal, "How to Keep Your Inheritance in a Divorce," Neil Parmar, Nov. 9, 2014