The Effects of Divorce on Inheritance Rights in California

It’s difficult to determine exactly how much of California’s population still seeks a divorce – while divorce rates have been plummeting across the country since the Great Recession began in 2008, couples do still continue to seek separation in cases where the differences in the relationship feel irreconcilable.

In recent years, out of roughly 20,000,000 Californians who had reported ever being married, only about 209,000 successfully divorced. Yet while most cases of divorce occur amicably and with mutual interest in separation, some are much messier, partially for emotional reasons, and largely due to the financial details of splitting from a long-term partner.

It’s very pricey to divorce, and many Americans might not be aware of just how entrenched their wealth is with their partner’s wealth until the time comes to confront the facts and untangle it all. For example, while an inheritance is typically only given to a single person, there are cases where it can become ‘jointly-owned’, and thus subject to being equitably divided in a divorce.

To understand how that can happen, it’s important to take a look at how property is defined and divided in California.

Understanding How Property Is Divided in California

As per the law, property in California is either community property or separate property. When discussing property, it’s important to separate what you own from what you might control, or take partial ownership in. You can live in your parents’ house, but it obviously isn’t your property.

You can also live in your spouse’s house, but if it’s only their name on the deed, and they owned it before you married them, it counts as their property rather than being yours as well. But this can get very complex very fast.

The basics first: community property is anything owned in a domestic partnership that legally makes two people become one entity, or community. Classically, this would refer to a married couple buying a home or car together. Rather than owning it individually based on who put the most money into the purchase, both people own an equitable share of the property.

Separate property is anything owned by an individual outside of marriage/domestic partnership. If you bought a condominium unit or a studio apartment unit before getting married, then even after tying the knot, that piece of property is yours and yours alone.

Separate property doesn’t become community property unless a deed is amended, and your partner or spouse has no claim over your separate property. With that in mind, we can move onto property or wealth given through an inheritance and how it might be divided in a divorce.

Inheritance: Community Property or Separate Property?

Whether an inheritance counts as community property or separate property depends on:

1. Whether a person received it while being married.
2. How the person decided to use the inheritance.

If received before the marriage or cohabitation began, then that inheritance is yours alone. It could be a boat, a vintage car, a home, or a large sum of money – that would be yours. If you received the inheritance after joining into a ‘community’ (marriage or otherwise), then that inheritance is still your own.

California law sees inheritance as separate property, generally. However, this can change under certain circumstances. To be more specific:

• If the will used language that states the inheritance is to be given to you, your family, and your next of kin, then this opens up the doors for a potential dispute during divorce proceedings, allowing your spouse to claim parts of the inheritance because it was effectively given to your family rather than just to you.
• If the will stated that it’s yours, then it’s yours. But that doesn’t mean it stays yours, depending on what you do with it. If your inheritance is commingled or transmuted into marital property, then it can technically be split in a divorce.

Commingling is the process by which your separate property is no longer your separate property. Say, for example, that you inherited a home. This is your home, but you moved in with your entire family. If this home, which began as separate property, becomes your marital home (any place occupied by both you and your spouse), it can be argued that it has become community property.

Likewise, if you received a sum of money and stowed it away in your joint account rather than your own separate bank account, it has become commingled and is no longer immune from being claimed in a divorce proceeding.

If you live in your jointly-owned property and rent out your inherited home, but then spend the profits on your family or invest them into a jointly-held asset, you open up the possibility for an argument that it is not wholly yours, either.

The other way to lose separate property status is quite simple and can’t really be done on accident – if you intentionally gift your inheritance or a portion of it to your spouse, that portion can’t be taken back during the divorce. This is transmutation.

Is Your Spouse Entitled to Your Inheritance?

To answer the previous question, it simply depends. Your partner is only entitled to a portion of your inheritance if you decide to somehow make it unclear that your inheritance is yours alone.

However, that doesn’t mean you can’t have nice things with your spouse. It just means you need to separate your inheritance from the property you enjoy together. It’s also important to remember that postnuptial agreements can settle these things, as well.

Regardless of whether the inheritance has become commingled or not, a postnuptial agreement signed by your spouse can declare that your inheritance is yours and yours alone, no matter what has been done with it. If put forth with the proper documentation, most divorce courts in California will honor this arrangement, regardless of how the inheritance was treated during the marriage.

It’s a complicated subject, but an experienced family law professional can help you make sense of the situation. How your inheritance is seen and how it might be divided during the divorce depends entirely on your own unique set of circumstances, so it’s irresponsible to offer concrete advice without thoroughly examining the information.