In California, assets and debts that are acquired during the marriage are generally community property, meaning that each party is entitled to one-half of such assets (or responsible for one-half of such debts). One MAJOR EXCEPTION to that principle of law is inheritance. If a spouse inherits money or other assets from family or others, such assets are considered to be that spouse’s separate property, and would not be divided in a divorce.
However, it is highly important to know that you must have segregated such monies and/or assets in a separate account in your own name. In other words, let’s say that you inherited $100,000 from your grandmother. You received a cashier’s check for such monies in your name through her estate. If you were to deposit that check into a bank account in your own name and it existed at the time of separation/divorce, it would be hard for any court to determine that it was anything but that spouse’s separate property. On the other hand, if you were to have deposited that check into the joint checking account with your spouse and some or all of the funds were spent on various expenses and splurges, etc., you likely have a limited ability to claim any of those spent funds without proof and dependent on what you spent the money on. You may have a claim for any remaining monies in the joint account assuming that there was not a valid transmutation into community property pursuant to Family Code section 852, which imposes certain requirements on marital transmutations, including that a transmutation “is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.” there is arguably a transmutation of those funds into community property by way of the deposit into the joint checking account.
In plain English, you will save a lot of headache, legal fees, and expert fees spent tracing the funds into and out of any joint account by simply keeping any inheritance segregated in your own account in your own name from the moment that you receive such inheritance. If you do want to use such monies for joint purposes in the future, consider a transmutation agreement with your spouse. For more information or to schedule a consultation, contact California Divorce Mediators at (949) 553-0911 or at www.cadivorcemediators.com.