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TGIF

inherited funds

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My husband inherited securities and used marital funds to pay taxes on the interest and gains the funds generated.  There were never any withdrawals from the inherited account.  Will this commingling make the inherited money marital property?

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Nothing in your post suggests any commingling occurred.  What makes you think commingling occurred?

 

I'm not quite sure what the point of your inquiry is.  Are you in the middle of a divorce or contemplating divorce?  If so, you are certainly free to argue that, in connection with the equitable division of marital assets, consideration should be given to the fact that marital funds were used to pay the taxes that resulted from the inheritance.  The extent to which the divorce court will do that obviously depends on a lot of facts that we don't know, including the extent to which you consented to the use of marital funds to pay the taxes.

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5 hours ago, pg1067 said:

Nothing in your post suggests any commingling occurred.  What makes you think commingling occurred?

 

In at least some community property states at least (and your state of California is one, if I recall correctly) using community funds to pay the tax on capital gains earned on what was separate property converts part of that separate property to community property. Hawaii is, of course, not a community property state and the extent to which a state using equitable division might apply a similar principle varies. I do not know how Hawaii would regard it off the top of my head. 

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1 hour ago, Tax_Counsel said:

In at least some community property states at least (and your state of California is one, if I recall correctly) using community funds to pay the tax on capital gains earned on what was separate property converts part of that separate property to community property. Hawaii is, of course, not a community property state

 

Well...given that Hawaii isn't a CP state, I don't really see the point of discussing laws of CP states (any particular state or in general) -- especially when the issue you've raised (transmutation) is not the same thing as commingling.  Suffice to say that your statement about California law is inaccurate.

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