If an inheritance check is endorsed and deposited into a joint account, does it become community property?

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If an inheritance check is endorsed and deposited into a joint account, does it become community property?

Husband received $125,000 in proceeds from the sale of his deceased parent’s house as outlined in their Will.  Check was made out to husband who then endorsed and deposited it into joint checking account. Is this money now considered community property or is it still considered solely his?

Asked on November 18, 2010 under Estate Planning, California

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

In CA, All of the property owned by a married couple in can be classified as community property, separate property, or quasi-community property.  The classification of property will determine how such things are divided between the parties upon dissolution of the marriage. 

As a general rule, community property is all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state.  However, any property acquired by gift or inheritance is not considered to be community property. The fact is that if one spouse receives an inheritance during the marriage, it is considered separate property.

That having been said, it is important not to co-mingle CP and SP.  At some point, if the proceeds can no longer be traced, what would otherwise be SP may become CP  This is known as "transmutation".  If this occurs, the community develops an interest in all or part of the separate property.


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