Believe it or not this is a common question that is asked by many couples and one that has both a yes and no answer.
I know that response may surprise you but I’ll explain.
If you are married and live in a community property state, anything you inherit is considered community property.
California is considered to be a community property state.
What does that mean?
It means when two people get married in California, they are automatically creating a community property relationship.
Any and all assets or debts acquired during the marriage are considered to be owned by both spouses equally.
I know you’re probably thinking, even if you inherited money or property from one of your relatives during your marriage? How can that be?
Yes, even if you inherited money or property from a relative.
But there’s a silver lining!
There are a few exceptions to this general rule.
What Are Some Exceptions To The General Rule For Inheritance and Community Property?
Under California law, property that is inherited by one spouse from a relative can be considered to be separate property, as is any income generated from separate property.
Gifts made to one spouse from a third party can also be considered to be separate property.
In addition, any property that was owned by one spouse prior to the marriage can also be considered to be separate property.
Well that’s good news, right?
Careful, there’s a little bit of a loophole here.
You need to make sure that you have taken the proper precautions and put safeguards in place to protect the gift or inheritance you have received. For instance:
1. If you received cash inheritance, DO NOT put it into a shared account with your spouse/partner. No commingling your inheritance with your marital assets!
2. Do not use your cash inheritance to purchase ANYTHING that could become community property, such as a car, boat, real estate, furniture, etc. Why? Because you never know what can happen, until something happens. That’s just life. So just don’t do it!
3. Do consider a prenuptial or postnuptial agreement to protect yourself in the long run. These are becoming very common in marriages in this day and age to protect what you have and what you may obtain in the future. It’s a better safe than sorry mindset!
When it comes to money and property, things can get pretty confusing for married couples. Not only do you have to keep track of who owns what, but you also have to consider how your assets will be divided if you get divorced.
It’s best to consult with an attorney or financial advisor to determine how your inheritance will be classified in California.
Have questions about how an inheritance will impact your community property rights?
Contact me today! I would be happy to help you understand the potential implications of receiving an inheritance while you are still married.
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