Yours? Ours? If You’re Going to Keep Separate Property Separate, Be Vigilant

Q: How does a wife convince her husband that her inheritance is not community property?

A: Oh, my, so much is communicated in that one little sentence!

Is hubby threatening to buy a sailboat with your windfall? Well, of course he shouldn’t do that, but you could still be on the hook for the bill if he does. Although it’s possible to keep an inheritance as separate property, it’s pretty hard to dodge a debt racked up by a spouse in a community property state such as California. (Other community property states include Arizona, Idaho, New Mexico, Nevada, Texas, Washington and Wisconsin.) In such a state, most of the property received and income earned during a marriage is considered community property. Ditto any debts incurred during the marriage.

The three major exceptions to that rule are inheritances and gifts given to one spouse, and property owned separately before the marriage. You can try to keep debts separate as well, but if your spouse uses your joint income to qualify for a loan, for example, the debt becomes community property.

If you’re going to keep separate property separate, you have to be vigilant. You shouldn’t, for example, park money from a gift or inheritance in a joint checking account, even for a minute, or use money from that account to pay bills related to separately owned property. Failure to strictly segregate what’s “ours” from what’s “yours” could give a divorce lawyer or creditor the wedge needed to grab your dough.

Your husband may not be interested in legal technicalities, however. There are many people who insist that everything in a marriage should be shared and nothing held back. These tend to be the people who have never been divorced--or those who are just about to file.

Information about finances should be freely and readily shared in a marriage, but both men and women can be smart to have something to call their own, as long as they don’t deprive their families in doing so. If you want to keep your inheritance separate, that’s good enough; you’re certainly entitled to do so. You might consider, however, buying your hubby a generous gift as a peacemaking gesture. He’ll need something to console himself, especially if you make him take the sailboat back.

There’s a Catch to No-Interest Card

Q: I know you’ve said smart people don’t carry credit card balances, but I’m really tempted to take advantage of some of these 0% interest offers I’m receiving in the mail. Wouldn’t it be financially smart to carry a balance at 0% for as long as the offer lasts and let my money earn 4% to 5% in a money market account?

A: Perhaps not as smart as you may think.

First of all, you’re not really earning 4% to 5% annually. Depending on your tax bracket, your real return is probably more like 2% to 3%.

And the 0% offer rarely lasts for more than six months, so the difference between charging and saving is more like 1%.

Credit card companies are counting on the low rates--especially 0%--to lower your guard. They’re hoping you’ll spend too much to be able to pay off the balance when the new, higher rate kicks in. Or, if the rate applies only to a balance transfer, they’ll charge you a much higher rate for new purchases--and then any payment you make will go toward paying off the balance that’s at 0% rather than paying off the new purchase at 17%.

If you are playing the credit card musical chairs game--transferring a balance from card to card--you’re taking the chance that the music could stop, the rate wars could end and you would be stuck with big interest charges. You also could be doing damage to your credit rating, because lenders are leery of people who open a lot of accounts in a short period of time.

You have to be smarter, faster and sharper than the credit card companies, which make their billions by getting you to carry a balance. To outwit them, you’ll need to call the credit card company and find out exactly when the rate expires.

Mark that date on your calendar, and plan to send in a check for your entire balance at least two weeks before it’s due. Earmark the savings you will use, and add to the savings every time you make a charge, so that you’re not caught short six months from now. If the 0% rate applies only to transfers, make sure you don’t use that card for new purchases--and vice versa.

If you decide that 1% isn’t worth the hassle--and many reasonable people would reach that conclusion--send the credit card company back its solicitation with a note asking that it remove you from future mailing lists. Meanwhile, be flattered that your credit rating is good enough to get you such a 0% offer--not everyone does.

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Liz Pulliam is a personal finance writer for The Times and a graduate of the certified financial planner training program at UC Irvine. She will answer questions submitted--or inspired--by readers on a variety of financial issues in this column. She regrets that she cannot respond personally to queries. Questions can be sent to her at liz.pulliam@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. For past Money Talk questions and answers, visit The Times’ Web site at https://www.latimes.com/moneytalk.