Legal Question in Wills and Trusts in California

Re: inheritance community property

Inheritance is separate property. Keep all documents to establish source from grandparents. If community funds are used to pay a mortgage on this house or improve it, a community property interest could develop. Transmutation [conversion] of separate property to community property requires a specific writing stating your intent to convert this home to community property, however, the best practice is to identify this as your sole and separate property on the transfer deed and use only your separate funds to pay costs associated with this house, particularly mortgage and improvements.

Re: inheritance community property

Inheritance is the beneficiary's separate property. However, you can transmute the character of the house into community property by a writing. If you transfer it directly from your grandparents' trust into your and your husband's trust, it could be construed as a transmutation. You would be better off doing it in 3 steps: (1) quitclaim from your grandparent's trust to you, individually as a married woman as your sole and separate property; (2) quitclaim from your husband to you; and then (2) trust transfer deed from you to your and your husband's trust, so that the property will retain its character as your separate property.