In their Orange County divorce, many people wonder whether the money or property they inherited will have to be given to their spouse in the divorce. Generally, inheritance is considered the separate property of the person who inherited it. Family Code section 770 (a)(2) includes as separate property of a married person, “all property acquired by the person after marriage by gift, bequest, devise, or descent.”
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.