What Happened To My Inheritance ?
By Sarah T. Schaffer, CFLS, LL.M

What Happened to My Inheritance?

What Happened To My Inheritance ?In California, all property acquired during marriage is presumed to be community property, unless it can be traced to a separate source. So, if our hypothetical spouse, Tracy, earns a $100,000 bonus, that money is community property, absent an agreement otherwise. However, if Tracy inherits $100,000 during marriage, the money would be Tracy’s separate property.

But does Tracy’s inheritance remain Tracy’s separate property? That depends on how the money was handled as well as the timing of its use. Was it deposited into a separate bank account or a community bank account? Was it used to pay Tracy’s spouse’s separate debts? Did Tracy buy something with it? Who is on the title to the thing purchased with the money?

In some cases, a reimbursement claim must be made within three years of the expenditure or during the divorce, whichever is earlier. This would happen, for example, if Tracy sought a return of separate money spent on a spouse’s separate debt, like child support from another relationship or the spouse’s debt incurred prior to marriage.

If Tracy voluntarily used separate property to pay community debt, that payment is presumed to be a gift to the community. So, if Tracy used the $100,000 to pay medical bills, or other expenses, Tracy would not have a claim for reimbursement.

However, if Tracy spent the money on the purchase of community property or Tracy’s spouse’s separate property, or to reduce the principal of a loan to purchase property, under Family Code section 2640, Tracy could be entitled to a return of a portion or all of the money.

Family Code Section 2640

Section 2640 has three important limitations: 1) there is no reimbursement for expenditures for maintenance, insurance or taxes; 2) the amount reimbursed does not include interest or any increase in the property’s value; and 3) if the value of the property decreases, the reimbursement is limited to the value of the property at the time of divorce.

Example 1: Tracy paid $100,000 for a down payment on a community property home during marriage. At divorce, the home was worth $500,000. Tracy is entitled to the return of her $100,000, but the balance would be divided equally.

Example 2: Tracy paid $100,000 in mortgage payments, which included insurance, interest, and taxes. In that case, Tracy would only receive the return of the amount the $100,000 reduced the principal of the loan, which will be far less than $100,000.

Example 3: Tracy paid $100,000 down on a boat during the marriage, but the boat was worth only $50,000 at the time the parties’ property is divided. Tracy is entitled to $50,000.

While section 2640 may not be fair in all cases, it is an improvement over the old rule that any purchase during the marriage was presumed to be a gift to the community. At least for the purchase of property, there is some protection of Tracy’s inheritance.

NOTE: You have just read the transcript from a recent Discover Magazine Article: “What Happened To My Inheritance?” written by Sarah T. Schaffer, CFLS, LL.M

What Happened to my Inheritance

ONE OF THE NATION’S “BEST LAW FIRMS” U.S. WORLD REPORT AND BEST LAWYERS IN AMERICA® Named one of the nation's Best Law Firms by US World Report and Best Lawyers in America Learn More

Sarah T. Schaffer In The News

Recent Media Events

Sarah T. Schaffer Recognized in San Diego Discover Magazines With over 220,000 attorneys in California, Schaffer is one of the few, numbering 178 within San Diego, to hold the distinction of Certified Family Law Specialist.

San Diego Magazine Women of the Year Awards Colonel Sarah T. Schaffer, USMC – Camp Pendleton recognized for her Military Service as JAG Officer.

Top 50 Influential Leaders in San Diego Sarah T. Schaffer is active in the San Diego County and North County bar associations and supports the programs of Kids’ Turn San Diego, a nonprofit that helps children through family separations, and Casa Cornelia Law Center, which provides pro bono legal services to victims of human and civil rights violations.

Dividing a Business - Discover Magazines Not all businesses have marital value, especially smaller businesses whose primary value is from the efforts of one spouse.

Sarah Schaffer on the cover of Discover Magazines
Read Sarah's Latest Article In Discover Magazines OVER 50 AND DIVORCING; Four Important Things To Keep In Mind
What Happened to My Inheritance? If you inherit money during marriage, would it be considered separate property? Learn More

Family law matters are never simple By your side every step of the way

Certified Family Law Specialist CFLS Sarah Schaffer and Leslie Ryland have been certified by the State Bar of California as “Certified Family Law Specialists,” a distinction earned by family law attorneys who have “gone beyond the standard licensing requirements.” Every attorney at Schaffer Family Law Group has either earned their CFLS Certification, or is actively working towards that professional goal as a requirement of the firm and our commitment to providing our clients the most skilled and proficient attorneys in San Diego County.

Take The First Step

What You Should Know

Top 10 Mistakes In A Divorce To avoid the top five mistakes in a divorce you must take a step back, remove the emotions and treat the process similar to a business transaction. Use these tips to help you expedite the process.

Divorce Over 50 How a 'gray divorce' will impact your retirement planning, including the timing of your retirement as well as the new economic reality divorce may bring to your life.

Top 4 Things To Know if Over 50 and Divorcing Getting a divorce after the age of 50 comes with its own set of challenges, both social and economic.

Professionals, Business Owners & Divorce Solving problems with the division of marital assets. The need for privacy and not leaving written records of your 'dirty laundry' for the world to see in the permanent public record and more...

Military Divorce Sarah serves as a colonel in the Marine Corps Reserve. Military families find Sarah’s understanding of the military and issues servicemembers face enable her to provide superior counsel.

Where Should I Start?

Find answers to common questions about divorce and family law

Browse Our FAQ's

Why Choose Sarah's Team?

Experienced, aggressive, reliable family law attorneys in San Diego

What Sets SFLG Apart?

What Can I Do Today?

Schedule a strategy session with an attorney by phone, video chat, or in office

Contact Sarah Today
Our People Make The Difference

Our People Make The Difference!

Home Page Consultation

Schedule A Consultation

To schedule a consultation please use the form below or call our office between 9 am - 5 pm at (858) 509-7907.

We will not share your information with ANYONE. EVER. FOR ANY REASON.

Agreement with terms *

Schaffer Family Law Group, APC

Divorce Lawyers in San Diego Divorce Lawyers in San Marcos