My grandfather left a portion of his assets to me payable when my grandmother passes. I plan on divorcing when my children are grown. If my grandmother passes prior to my divorcing, what, if any, portion of my inheritance is community property?
The short answer to your question is "no." An inheritance is separate property under California law.
That being said,if you receive an inheritance while married and do not take any steps to make sure that it is both maintained separately from your marriage, and to make sure that it passes separately at your death to your children or other heirs instead of divided between your spouse and children, then you should consider putting any such inheritance into a separate living trust or other estate planning entity to assure that this spouse you are planning to divorce does not have any claim on it should you die while still married.
You should consult with an experience estate planning practitioner in your area if and when the inheritance is received. If you are really concerned, you might want to do some "pre-planning" by establishing a separate property trust in your name that could, with proper planning, receive any inheritance you might receive in the future. This would be important in case you were incapacitated at the time your grandmother passes in the future. For example, you could create a power of attorney in favor of a friend that gives them the power to direct any separate property you have or may receive into a living trust that you already had created.
Please remember to mark what you believe to be the best answer to your question. This answer is provided by estate planning attorney Robert P. Bergman, with offices in San Jose, California. Mr. Bergman is a Certified Specialist in Estate Planning, Trust and Probate Law (State Bar of California Board of Legal Specialization), and has been practicing since 1980. This answer does not create an attorney-client relationship, and is only intended to provide general legal advice within the limits of the question asked. If you wish to create an attorney-client relationship for specific legal advice, it will be necessary to enter into an engagement for legal services. More general legal information about wills, living trusts, and estate planning can be found at Mr. Bergman's main website at www.lawbob.com, or his information website at www.lawbob.net. Mr. Bergman also offers free living trust seminars and wealth preservation seminars at his offices in San Jose. For those unable to attend a live seminar, an online living trust seminar may be viewed or downloaded at www.freelivingtrustseminar.com.
No inheritance is separate property. To keep it separate property you need to keep it separate and not commingle it with community property (keep it in a separate account and pay your share of taxes attributable to any income generated by the separate property from the separate property). Also you should not use the inheritance to enhance the lifestyle of the community as that could create a support obligation issue.
The best way to ensure protection would be if your grandmother has capacity and can change a trust if any or draft a will and leave your share in trust with provision in the event you become divorced. This gets complex and you should consult an estate planning attorney.
The general advice above does not constitute an attorney-client relationship: you haven't hired me or my firm or given me confidential information by posting on this public forum, and my answer on this public forum does not constitute attorney-client advice. IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Inheritance is considered separate property in California however, there are very strong presumptions that make it very difficult to maintain the characterization of the property as separate if you are married at the time you receive it. The way you take title to the asset and what you do with the asset going forward dictate whether it will stay separate property. There are potentially ways in which the inheritance can be given to you to protect its characterization as a separate property asset. If you would like a more detailed and specific answer, please feel free to contact my office for a free consultation. (800) 818-3954
This does not constitute legal advice nor does it create an attorney-client relationship.
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