Explaining community property regarding inherited assets

Q. Is there still a legal option that I can leave my son’s inheritance to him as his sole and separate property? He has been separated from his wife for two and a half years. My son is 60 years old and has several disabilities. When I go (he is living with me now), he will need to go to a nursing home as there is no one to take care of him. He will need money to help him.

A. An inheritance by law will be his sole and separate property. Under Idaho law, separate property is property owned before marriage, inherited or received by gift. Everything else is community property, which is owned half by the spouse. Therefore, your son’s wife will have no interest in the inheritance unless he gives it to her. There is a presumption that property is community property. Therefore, it is essential that good records be maintained regarding the source of the property.

It is also very important that he not combine the separate property with community property. In Idaho, this problem is especially significant because the earnings on separate property are community property unless there is a clause in the will specifying that the earnings from the inheritance remain his separate property. Otherwise if separate property earnings accumulate in an account, it can result in the account becoming all or partially community property.

The proceeds from separate property remain separate property. Therefore, he can use the separate property to acquire other separate property but should be very careful to identify the replacement property as his separate property and not mix it with community property.

Another problem would arise if he adds his wife’s name to the account, which could be used as evidence that he intended to change the property to community property and/or give it to her at his death.

It would be advantageous for you to create a trust in your will for your son’s inheritance so that he does not end up owning the assets outright but they are still available for his needs. The trust would protect his inheritance from his wife and creditors. The trust would then designate where any remaining assets would go at his death to the extent they are not utilized for his needs.

Another option you might consider is to create a special needs trust in your will. This would allow the assets of the trust to be used for his incidental needs but still allow him to be eligible for Medicaid or other government programs. A special needs trust must be carefully prepared. If you wish to consider this or some other trust arrangement, you should consult with an attorney who specializes in estate planning.

Robert E. Farnam is an attorney practicing in Idaho Falls. This column is provided by the 7th District Bar Association as a public service. Submit questions to It’s the Law, PO Box 50130, Idaho Falls, ID 83405, or by email to rfarnam@holdenlegal.com. This column is for general information. Readers with specific legal questions should consult an attorney. A lawyer referral service is provided by calling the Idaho State Bar Association in Boise at 208-334-4500.