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Commingled Property: What It Is & How It Will Impact Your Divorce

Before you get married, the property you own is considered separate property. If you had $20,000 in your bank account before saying, “I do,” that amount will still classify as separate property unless it comingles with other marital property. For example, if you owned a home before you got married, moved into it with your new spouse, and both of you paid the mortgage moving forward, it would no longer be just separate property. Your new spouse will then have an interest in it should the two of you divorce in the future. In other words, your house is now commingled property.

How will something like this impact your divorce? Well, given that dividing property is already a somewhat tricky task, commingled property can amplify the complexity of it. If you are in the midst of a divorce that involves commingled property, it would be in your best interests to seek skilled legal representation to assist you in properly ensuring property is divided fairly.

The Role of Commingled Funds in a Divorce

When you and your spouse move forward with the process of divorce, you will be required to divide all marital property, which essentially means that any property or funds that were used to benefit the marriage will become marital property.

Below are some examples of commingled funds:

  • If you inherit money and deposit the inheritance into a joint account you share with your spouse, those funds will become marital property.
  • If you owned a home before your marriage and the rest of the mortgage is paid for using funds from a joint bank account, the home will become marital property.
  • If you and your spouse combine your resources during your marriage to buy a car, television, home, or any other type of property, that property will become marital property.
  • If you have an investment account or start one that both you and your spouse’s incomes contribute to, the funds in the account will be considered marital property.
  • If you have a checking or savings account that both you and your spouse are depositing funds into, those funds will be considered marital property.
  • If you borrowed money from family and used it to benefit you and your spouse, those funds would become marital property. In cases where money is owed, at the time of the divorce, it would be the responsibility of both spouse’s to repay it.

How to avoid commingling your funds throughout your marriage:

Keeping a detailed account of what you do with your assets is not only a good standard practice, but it will help you in the future if you and your spouse ever divorce, saving you time, money, and unnecessary stress. Here are some suggestions if you would like to avoid commingling assets during your marriage:

  • One of the easiest ways to go about keeping separate property from commingling and becoming marital property is to set up a prenuptial agreement in which it is plainly stated which property will be considered marital property and which will remain separate.
  • Never use your separate property to pay off marital debts. If your parents were to give you a large sum of money as a gift, for example, do not use it to pay off your home or to pay for a credit card debt. When a marriage benefits from funds, those funds become marital property.
  • If you own property prior to your marriage, keep your name alone on the deed and, if that separate property requires maintenance, only use your income to fund it. You should also keep strict records to prove that your spouse did not contribute to its maintenance.
  • Before making a large purchase, such as a home or a car, consider discussing if it should be marital property or separate property. If you want to have an equal interest in it, use marital funds to purchase it.
  • If you want property purchase to remain separate, only use funds that are considered separate property to buy it and keep records about the funds used to make the purchase.

Before you get married, it would also be helpful to consult with a family law attorney so you can better understand what steps you and your future spouse should take to protect your respective separate property.

Prenuptial and Postnuptial Agreements in Orange County

Marriage is an exciting milestone, but everything in life requires planning, so it is crucial that you plan properly for your future. To ensure that your separate property is protected, you will need to seek the assistance of a skilled family law attorney. At Alternative Divorce Solutions, our Orange County legal team will help you and your spouse create a marital agreement perfect for you.

Contact our office today at (949) 558-2624 to schedule a free consultation with a knowledgeable member of our team.