Though dividing funds equally is optimal, there are certain situations that may warrant leaving more to one of your heirs.
In California, an inheritance is considered individual property as long as the inheritance was kept separate.
Unless the will explicitly states otherwise, inheriting a house with siblings means that ownership of the property is distributed equally. The siblings can negotiate whether the house will be sold and the profits divided, whether one will buy out the others' shares, or whether ownership will continue to be shared.
Usually, inherited property is separate property and belongs to the individual alone. No obligation to share.
An Inheritance Is Separate Property
When you receive an inheritance, most states treat it as “separate” property. This means that it is considered your inheritance, not “our” inheritance as it relates to your spouse.
Is an Inheritance Separate or Marital Property? In most states, an inheritance is considered separate property, whether you receive an inheritance before, during or after your marriage. Your spouse is not entitled to use or spend your separate property.
Writing a will and naming beneficiaries are best practices that give you control over your estate. If you don't have a will, however, it's essential to understand what happens to your estate. Generally, the decedent's next of kin, or closest family member related by blood, is first in line to inherit property.
Prenuptial and Postnuptial Agreements are the strongest way to protect your separate property from your spouse. Your separate estate and any potential inheritance, or gift, can be clearly defined in an agreement along with rights and responsibilities of both spouses in the event of a divorce.
If one sibling is living in an inherited property and refuses to sell, a partition action can potentially be brought by the other siblings or co-owners of the property in order to force the sale of the property. In general, no one can be forced to own property they don't want, but they can be forced to sell.
Assets inherited by one partner in a marriage can be considered separate and owned only by that partner. However, inheritances can be ruled as marital property jointly owned by both partners and, therefore, subject to division along more or less equal lines in the event of a divorce.
Full blood preferred to half blood. — Heirs related to an intestate by full blood shall be preferred to heirs related by half blood, if the nature of the relationship is the same in every other respect.
Equalize with Different Assets: If one heir receives an asset that other heirs don't benefit from—a family business, for example—you might make their inheritances balance with life insurance or other beneficiary-designated assets to the remaining heirs.
One of the most common solutions to dividing inherited property is simply to sell the property and split the proceeds from the sale equally between all siblings. This solution typically offers the most benefits for all sides since it's nearly impossible to split physical property into fair, equal shares.
Inheritance is Considered Separate Property
Therefore, your spouse cannot claim an interest in the inheritance that you receive during your marriage.
That said, an inheritance of $100,000 or more is generally considered large. This is a considerable sum of money, and receiving such a windfall can be intimidating, especially if you have limited experience managing excess funds.
Generally, the order of intestate succession is as follows: surviving spouse or domestic partner and children (biological and adopted) first, then their surviving parents. If they had children who are no longer living but have grandchildren, those grandchildren may be set to inherit.
An heir can claim their inheritance anywhere from six months to three years after a decedent passes away, depending on where they live. Every state and county jurisdiction sets different rules about an heir's ability to claim their inheritance.
In most states, it is impossible to totally disinherit your spouse in a will. Spouses have a right of election, and can claim a certain fraction of the estate as their elective share, no matter what the will says. In community property states, a surviving spouse owns half of their shared property.
Sign a Prenuptial or Postnuptial Agreement
A prenuptial or postnuptial agreement can provide explicit protection for your inheritance. A prenuptial agreement is signed before marriage, outlining how assets, including any future inheritance, will be handled in the event of a divorce.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.