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3 forms of commingling that can complicate property division

On Behalf of | Jan 15, 2025 | Property Division

Property division can be a very complicated part of the divorce process. Spouses have to locate and properly value their shared assets. They then have to determine a fair and reasonable way to divide those assets.

The separate property that belongs to one spouse or the other is usually exempt from the asset division process. However, sometimes separate property becomes part of the marital estate. People make mistakes when managing their resources that put their assets at risk.

Commingling can convert separate property into marital property that is subject to division in a divorce. What common forms of commingling could endanger the assets that could otherwise remain separate property?

Depositing funds in a shared account

Perhaps one spouse saved thousands before getting married. Maybe they received a significant inheritance from a parent or great uncle. Generally speaking, the spouse with separate financial resources needs to maintain those assets in a separate bank account held in their name only. If they deposit the funds into a shared account, then those resources may be vulnerable to division in the event of a divorce.

Maintaining assets with marital income

Many resources require routine investments to maintain or improve their value. Businesses and real property holdings are among the resources that require consistent reinvestment. The use of marital income to maintain assets or improve their value could lead to claims of commingling. Reinvesting income in a business or replacing the furnace in a home with marital income could lead to claims of commingling that make the asset vulnerable to division in a divorce scenario.

Giving a spouse ownership or control over separate property

Adding a spouse as a co-owner to a separate asset may seem like a smart move during a marriage. That way, the spouse can retain that property without it passing through probate court if the other spouse dies. Unfortunately, adding a spouse as a co-owner to an asset can easily result in claims of commingling. Whether a spouse executes a deed to give their spouse an interest in the home they inherited or adds them as a co-owner to an account funded with premarital income, the spouse’s access to and control over their separate property compromises its status as separate property.

People preparing for divorce generally need to understand what assets might be separate and when the designation of separate property could be subject to challenges in family court. Commingling is relatively common, and people may need to prepare for a more complicated property division process in cases where there are questions about whether assets are still separate property or have become part of their marital estate.