Inheritances are not separate, not community, property. If the inheritance was to the husband alone, he can do what he wants with it.
Any property received by either spouse, during the marriage, from inheritence or gift is the separate property of the receiving spouse. In your scenario, husband needs to be sure not to commingle the inheritence with any community property. Any time separate property monies are deposited into a joint account, it gives rise to a claim of gift, or at the very least, an accounting nightmare. He should simply place the money into an account solely in his name. If he gives it to his mistress, and things don;t work out, his separate property would then be the property of the mistress because he gifted it to her.
While inheritance is considered the separate property of the spouse, sometimes there are problems with identifying particular items as separate property. While it is pretty simple to identify the heirloom jewelry or antique furniture as inheritance, money can be difficult to identify if it is not kept separate. People may inherit money and then “co-mingle” the funds by depositing them in joint accounts or they may buy things that the other spouse may later claim were subsequent gifts. If you blew all your inheritance on a trip for two around the world, good luck trying to charge your spouse with half the value of the trip. If you used it for a down payment on your house, that is pretty easy to identify (other rules often come into play with this scenario). With co-mingling it is still possible to identify the character of the funds through various tracing methods. Follow the paper trail. As with most issues in the law, clear evidence is your best friend, and if the issue ever goes to trial, whoever has the best credible evidence will win on that particular issue.
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