Q: Are the funds from the sale of inherited “personal” property sold during a marriage now joint or separate property?

A: Inherited personal property (for example, jewelry or furnishings) is separate property by definition. If sold, the cash proceeds of that sale remain separate property.

Inherited real property (for example, a home on land) is also separate property by definition. Just as with personal property, if the home is sold, the cash proceeds of the sale remain separate property.

In either case. if those cash proceeds are commingled (i.e. deposited into the same bank account) with community funds, the entirety of the funds are presumed to be community property and it becomes incumbent on the spouse claiming part of the money as separate property to prove what portion of the funds remaining are separate property. This can be, and is often done, through a process called "tracing." There are special legal rules (including the community out first rule) which govern this process. Any modestly experienced divorce lawyer is thoroughly familiar with these rules and the process of tracing.

The fact that you have separate bank accounts is not likely to be material to process of tracing. Your paycheck during the marriage is community property and depositing it into a separate bank account in your sole name only preserves its character as "sole management community property" and does not magically convert it into your "separate property." (The distinction between "sole management community property" and "joint management community property" primarily affects the rights of a creditor trying to collect a debt or claim for the liability of one of the spouses.)

If a spouse used community funds (for example, wages from a job performed by either spouse during the marriage) to pay the mortgage, the couple's community property estate has a right of reimbursement against the separate estate of the spouse who owns the inherited home. If both spouses lived in that home during the marriage, the separate estate of the spouse who owns the inherited home may have a reimbursement claim against the couple's community estate for the use (i.e. fair rental value) of the home. Often, these two reimbursement claims offset one another such that the cost of paying a lawyer or accountant to perform the mathematical calculations involved exceeds the net value of the claim, especially if the time involved in only a couple of years. But there are situations where the difference can be significant.