Q: When increasing separately inherited property, by an 1031 exchange, is my spouse entitled to the any of value in CA?
I inherited 1/3rd of my parents house, upon sale I would like to invest using a 1031 exchange in a larger value property that will generate income. I do not know if my spouse is entitled to any revenue generated from the future value increase or the income it generates or does the purchase alone make it community property? We have been living separately for over two years.
A: California defines separate property as that property acquired prior to marriage, after the date of separation, property acquired via inheritance, gift or devise. California additionally defines all rents, proceeds and interest generated by separate property to be the separate property of the acquiring spouse. So with the limited amount of facts you've presented it seems as if the income your separate property inheritance generates will be your separate property for multiple reasons, one because it was acquired via inheritance and two because you've been separated for over two years.
But you should call a family law lawyer and give them ALL of the details to fully protect yourself and make sure you are doing it in a fashion that completely protects you. If you have further questions please do not hesitate to contact me at my office.
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