What Happens to Commingled Assets During Divorce?

 Posted on January 13, 2023 in Divorce

When a couple decides to divorce, they must divide their property between them. As one might expect, each spouse brings property into the marriage, but community property is also acquired throughout their relationship. Some couples are exceedingly careful about segregating their respective personal property, while others pay little attention to the matter until divorce becomes a possibility. If you are in a position where your personal property has become commingled, or “mixed in”, with your spouse’s, consulting an experienced divorce lawyer may be the best option for you.

What Is Commingling?

Commingling occurs when two individuals’ separate property becomes intertwined or mixed. The best example of this is an individual depositing individually-owned funds—money he or she made before the marriage or received as an inheritance during the marriage—into a joint marital checking account. Doing so, in most cases, causes the deposited funds to lose their identity as separate property.

It is important to understand that in equitable distribution states such as Illinois, personal property that is commingled becomes marital property. This process is referred to by statute as transmutation of property. It is very difficult to keep private property separate when willfully commingled, and indeed, the court presumes that your intent is to commingle your property if you do so.

Tracing Assets

Texas law requires that each spouse’s separate property is to be assigned to that spouse during the relevant proceedings. This means that if you believe your property has been commingled, by yourself or your spouse, you may need to trace it. Tracing means identifying an asset’s origin, supported by the appropriate documents and/or expert testimony.

It is possible to preserve the integrity of some personal property, but only if it can be traced back to you with clear and convincing evidence. The most common asset to be traced is cash, as liquid assets can be traced back to one person with bank documents or deposit slips, but it is possible to trace many different assets. Some, however, may require more legwork than others. For example, it can be quite difficult to prove specific liquid funds belong to you unless you have bank documents, but if you received a valuable item as a gift or inheritance, you may be able to trace it by providing the accompanying letter or asking a relevant person to testify as to the property’s origin.

Seek Knowledgeable Assistance From a Frisco Divorce Lawyer

When you are in the midst of a divorce, all you want is to get through it quickly with a solution that is fair to all. Contact an experienced Collin County divorce attorney to get the help you need. Call Pfister Family Law for an initial consultation at the Pfister Family Law today.

Sources:

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.3.htm

https://www.texasbar.com/AM/Template.cfm?Section=articles&Template=/CM/HTMLDisplay.cfm&ContentID=35144