By default, inherited assets are yours alone. But how you handle the inheritance can blur an otherwise clear distinction between separate and community property.



A recent



Wall Street Journal



article, “



When Does an Inheritance Become Marital Property?



“ (May 6, 2026) raises an important question, one that we would answer, “Only when you want it to.” Unfortunately, even though the laws of all 50 states classify an inheritance as separate property, it doesn’t always



stay



separate.

Consider three common scenarios involving John and Mary, a married couple:

  • Commingling.



    John inherits $100,000 from his uncle. When the check arrives, John deposits it into the couple’s joint bank account –



    et voilà



    – in that instant the money changes from



    his



    to



    theirs


    .

  • Joint Asset.



    When John receives the check, he deposits it into a bank account owned and controlled by him only. So far, so good. Then he sees the Mercedes-Benz that he’s always wanted, buys it, and, on the title, shows “John and Mary” as the owners.



    Theirs


    .

  • Cost of Ownership.


    Instead of receiving cash, John inherits his uncle’s free-and-clear condo. Separate property, right? Right – until property taxes come due, the house needs a new roof and other major repairs, and he pays for them from the couple’s joint checking account, arguably giving the marital community an ownership interest in John’s erstwhile separate property.



To be clear, the blurring of separate and community property isn’t necessarily a tragedy. For a couple who have a solid marriage and a well-conceived estate plan, are in good health, and anticipate no legal threats to their accumulated assets, who owns what will largely be a non-issue.

However, determinations of separate versus marital property can become important in situations such as these:

  • the marriage is perceived to be at risk;

  • one spouse is engaged in a high-risk business or profession that is unusually vulnerable to litigation or failure;

  • one or both spouses have children from a prior marriage;

  • the couple did not receive professional guidance in preparing their will or trust; and/or

  • one spouse may need to qualify for government benefits.



KEEPING THINGS SEPARATE

Here are some ways you can preserve the separate nature of your inherited property:

  • Put inherited cash in a bank or brokerage account strictly in your name – or, better yet, in a revocable separate property trust – with your spouse named as the beneficiary.

  • Designate yourself as the only party who can make withdrawals.

  • Avoid using (a) inherited cash to pay for joint expenses or (b) joint cash for expenses related to the inherited asset.

  • If you inherit real estate, pay for major repairs and property taxes with separate cash (if there is any) or with the proceeds of a home equity line of credit secured by the inherited property.

  • Be sure that any inherited real estate, vehicles, or other titled assets are solely in your name. If you purchase assets with your inherited funds, those assets must also be titled only to you (that might require your spouse to sign a disclaimer or quitclaim deed).

  • Keep a complete file of all documentation and correspondence related to your inheritance.



SEPARATE PROPERTY FOR YOUR KIDS

If you have children, you can take steps in your own estate planning to protect the assets they inherit from you.

As we describe in our website article, “


Trusts Made Simple


,” when you leave an inheritance to a child outright, it can be put at risk from many sources, such as the child’s creditors, former spouses, addiction problems, or general inability to manage money. Leaving an inheritance in a lifetime protective trust or a separate property trust will shield these assets from such threats.

If you anticipate leaving a substantial inheritance, a lifetime protective trust can be designed to become a dynasty trust, which can provide protection for generations.

From the Family Wealth Matters archive: