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What happens to commingled assets in a divorce?

On Behalf of | Nov 17, 2023 | Property Division And Asset Preservation

Property division during divorce only affects marital property. Every spouse gets to keep their separate assets, such as property owned before the marriage or gifts. 

However, there are instances when separate and marital assets mix, making it difficult to tell which is which. 

First, it is essential to understand how this may happen

Commingling of assets can occur in several common scenarios. They include:

  • Joint accounts: Both spouses may deposit their individual funds and marital income into a jointly-held bank account. Over time, it becomes challenging to distinguish between contributions made before and during the marriage.
  • Investments and property: Using separate funds to invest in property, business or assets jointly owned can lead to commingling. For instance, a spouse may pay for the downpayment of the family home using personal funds.
  • Shared expenses: Paying for shared expenses like mortgage payments and household bills using personal funds can mix separate and marital assets. Separating individual contributions from joint finances can be challenging without a clear distinction between the funds used.

Commingling assets can also happen unintentionally, especially in the natural course of marriage. Either way, it can significantly complicate the property division process.

Separating intertwined assets

Courts may attempt to trace the origin of commingled funds to determine their initial status as separate or marital property. This meticulous process involves scrutinizing financial records and evidence to establish the source of the funds. If adequate tracing isn’t feasible, the property in question will be presumed to be marital property and will be divided equitably.

The complexities of commingled assets can present a formidable challenge during divorce proceedings. It underscores the need for seeking legal guidance – to help understand your legal rights and protect your financial interests.