inheritance

What is the name of your state? California
My Sister and I inherited from our Mother some years ago. We both put our money into a joint venture in property. That property was sold and we have recently purchased a new home in joint names.
My Sister is now divorcing, will this house be included in her settlement?
The inheritance was invested in peoperty and never in his name but ours jointly.
The escrow closes next week and I am scared that he will file for a share and my sister and I will be forced to sell to pay him off.

[I AM ALWAYS LIABLE]

Originally posted by steenberg
What is the name of your state? California
My Sister and I inherited from our Mother some years ago. We both put our money into a joint venture in property. That property was sold and we have recently purchased a new home in joint names.
My Sister is now divorcing, will this house be included in her settlement?
The inheritance was invested in peoperty and never in his name but ours jointly.
The escrow closes next week and I am scared that he will file for a share and my sister and I will be forced to sell to pay him off.

My response:

The problem, as I see it, is not going to be having to share her inheritance money. That principle amount is hers, and will always be her separate property. The reason for this is because the money she received is always "traceable" back to the inheritance.

Her real problem is the investment appreciation of the inheritance money; e.g., interest, increased real estate property values, etc., that the inheritance money generates.

All such "increased" value (beyond the inheritance money) is "community property" and divisible pursuant to California's Community Property laws.

For example, if the house, today, is valued at $100,000.00, and the house increases in value to $200,000.00, then you get your 1/2 "profit" as joint owner, or half of the $100,000.00 increase. She gets her half of the $100,000.00 increase in value, which would be $50,000.00.

Her $50,000.00 is realized as profit, above and beyond her inheritance money. So, that $50,000.00 is split in half, and he may very well be entitled to $25,000.00 as his "Community Property" share.

And yes, he could either force a sale, or it could be ordered that he be entitled to a lien on the property, to be paid to him at the sale of the property, plus all accrued interest (which would be either set by agreement by your sister and her husband, or by the court if no agreement).

Right now, your sister is a liability to be investing with you because whatever happens with her, indirectly affects you.

Good luck.

IAAL