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Untangling commingled assets during divorce

When couples tie the knot, their lives become intertwined. When that blending of their lives extends to their finances and possessions, it can have significant implications if the marriage comes to an end. What should you know about commingling and the challenges it can create?

What is commingling?

In a divorce, property falls into two categories: separate and marital. Separate assets belong to one spouse before the marriage or come as a gift or inheritance during the marriage. Marital assets, however, are those acquired by either spouse during the marriage, and both spouses have a claim to these assets.

Commingling happens when a spouse mixes their separate assets with marital assets. Over time, this mixing can blur the lines between what is separate and what is marital, significantly affecting how the court divides those assets in a divorce.

One example of commingling might include using one spouse’s inheritance to make mortgage payments or renovations on a home owned jointly by the spouses. In other cases, a business owner may use marital funds to support their small business. In these situations, the court may divide those commingled business accounts, inherited funds and other assets in divorce.

How can you determine who owns what after commingling?

Dividing property in a divorce can get tricky when commingled assets are involved. The goal in most places is to fairly distribute marital assets while letting each spouse keep their separate assets. But when assets are mixed, figuring out who owns what can be challenging.

Here is how the process usually works:

  • Identify the commingled assets – First, you need to figure out which assets are mixed. This step involves tracing back to determine whether each asset was initially marital or separate property.
  • Determine the status of the assets – Once you identify the mixed assets, you need to figure out how much of each asset’s value is now marital property. This step often requires a detailed financial analysis and might need help from forensic accountants.
  • Divide the commingled assets – After you determine the status of each asset, the court will divide your assets according to state laws and the specifics of the divorce agreement. The help of an experienced divorce attorney can help you fight for your fair share during this process.

Dividing commingled assets can be a financially complex. However, with careful identification and analysis, you can ensure a fair division that protects your financial health.