How an inheritance may be treated during a divorce

| Sep 27, 2020 | Divorce |

Estate planning is a good way to pass wealth and property between generations in a family. When an individual receives an inheritance from a deceased relative, the bequeathed property becomes theirs in ownership rights. How they choose to use that property upon receipt will influence whether it is subject to division during their California divorce.

Questions of property division and divorce should always be directed to trusted family law attorneys. The general information contained in this post is not intended to be read as legal advice. Inheritance divisions can be nuanced and will be influenced by the facts of individual divorce cases.

Inheritance: The naming of a beneficiary

When an individual creates their personal estate plan, they can name beneficiaries to inherit their wealth. A beneficiary receives their share of the decedent’s estate, and if they are named as the exclusive recipient of their share, it becomes theirs outright. However, as readers may know, property in California is subject to community property division. Generally, property that is owned by both partners to a marriage is divided evenly upon their divorce.

Comingling inherited property

If a decedent names both married persons as recipients of a single bequest through their estate plan, that bequest of property may be considered community property at the time of their divorce. That is because both partners are joint owners of it at the time the property is acquired. However, if only one partner is named an estate beneficiary then their inheritance may be considered separate property and not subject to division.

If separate inherited property is deposited into a shared account, or is used to buy jointly owned property, then it may be considered community property as it has been comingled with shared property. The transition of separate property into community property is something that individuals can discuss with their own divorce attorneys.

Inheritances serve an important role in protecting familial wealth and looking out for future generations. They can become entangled in court matters when they come up during divorces. Sound legal counsel can guide individuals through these and other family law issues.