What is Commingling and Why it Matters

The end of a marriage also means the imminent division of property and debt.  California is a community property state.  This means that at the time the parties are divorced, the court will make an equal division of all the parties’ marital assets and marital debts.  In general, anything owned before the parties are married is considered separate property and is not subject to division in the divorce.  Similarly, property that is received as a gift, through an inheritance, or through certain types of law suit awards are also considered separate property, even if a spouse receives these things during the marriage.  An important exception may apply to these situations where the separate property has been commingled. 

Commingling simply means that separate property and marital property have been somehow mixed together.  This is most easily seen when there are funds mixed together.  So, for example, if a wife maintained a separate checking account before marriage, but then once the parties are married she adds the husband’s name to the account and deposits receipts from the parties’ marital rental property into that account, then the contents of the account have been mixed together, or commingled.  The end result is that the contents of the account are now marital property and subject to division in the divorce.  It is possible to try to prove to the court which portion of the account contents are separate property by employing a technique called “tracing.”  This means that a spouse may be able to show a court that part of a commingled account should actually be determined to be separate property by tracing back to the separate source of the funds.  A spouse could, for example, show deposit and withdrawal slips to show the amount that was in the account at the very beginning of the marriage.  Be aware, however, that this technique will not always be effective and could end up being expensive and time consuming to employ.  Commingling is not limited only to liquid accounts.  For example, if the parties live together during the marriage in a home owned by one of the spouses before the marriage, and both spouses contribute substantially financially to the home, use marital funds to pay bills and the mortgage, it is possible that the court could consider this to be commingling and determine the house or at least a portion of the equity is now marital property.

Divorce can be a time of change and chaos, but we are here to answer your questions. Contact us today at 619-800-0384 to discuss your divorce and how to get started.