Inherited Money In Community Property Divorces: Where Does The Money Go?

Posted on: 1 July 2015

When you are in the midst of a divorce proceeding, one of the most common areas of concern is the finances. Community property division, AKA the "half and half" rule, makes the distribution of money fairly simple in most cases. However, when it comes in inheritances even community property division can get a little confusing. Keep reading to learn about how inheritances are treated during community property divorces.

The Rules of Inheritance

In most cases, an inheritance that is designated for one person is classified as separate property. Separate property is property that is excluded from division during a community property divorce. In short, the individual who inherited the money or property is typically the only one who has the right to keep it.

Any money or assets held before the marriage are also included in the category of separate property. It is important to note that all inheritances must be well documented to properly enforce this separate property rule. Inheritance can be proven using documents such as wills, trusts, and bank account statements.

Loss of Immunity

Even if an inheritance is clearly separate property, that may not be enough to keep your spouse from sharing the money or property during the divorce. Both money and property can lose their immunity from inclusion in marital property in certain circumstances.

These circumstances primarily involve what is known as co-mingling of assets. This happens when:

  • One spouse's inheritance is deposited into a joint marital bank account
  • Inherited money is deposited into an individual account, but a spouse is later added as a primary user
  • Joint marital money is added to an account that contains only inherited money
  • Spouses both live on a property that was inherited by one spouse, even if only one spouse's name is listed on the property

Co-mingling of inherited assets during marriage can be a major mistake because it makes it extremely difficult, if not impossible, to tell who owns what in the future. This is the reason that co-mingled funds and property can lose their immunity during a divorce. 

If you find yourself in the midst of a divorce where an inheritance is on the line, it is important that you don't leave the property division to chance. While your inheritance should be safe from property division legally, you need to get a family lawyer like Tolman Kirk Clucas PLLC who specializes in divorce cases to make sure that happens. Most family lawyers will arrange a free consultation to discuss your case today!