Divorce And Property Commingling

During a divorce, each spouse gets to keep their separate property and the two divide the community property. The division becomes complicated, however, if the separate property has been commingled with community property. Commingling occurs when the two categories of properties are so mixed up that no one can distinguish them.

Examples of Property Commingling

Property commingling can occur in various ways; here are some classic examples:

Capital Expenditures

Property commingling occurs if you invest both separate and community resources in a business. Say you had a business before your marriage, but your partner gave you some funds to grow the business or you used family resources to grow the business. After many years, it might be impossible to distinguish which part of the business is separate and which part is community property.

Business Management

Property commingling doesn't always involve actual money or direct mixing of funds. Investing human resources in a business can also lead to property commingling. For example, if your partner manages your separate business, the business might transition to a community resource. Again, it will be difficult to know which part of the business is due to your partner's efforts.

Joint Purchases

Whenever you use joint funds to buy a property, the property becomes a community resource. Say you use funds from separate accounts or from a separate and community account to buy a home; that home becomes community resource.

Loan Repayments

Many people buy things, such as cars, homes, and business equipment on finance. If you have such a loan and your partner helps you to repay it, then the property that you bought on finance becomes community property.

Joint Checking Accounts

Having a joint checking account is one of the most common ways in which people commingle their funds. If you both deposit and withdraw funds from the account, it can be difficult to determine how much of those funds are separate or community property after some time.

Solutions

Dealing with separate property can be difficult, but there are a few things you can try. For one, you can go by the clauses in your prenuptial or post-nuptial agreement, if you have one and it is legally valid. Secondly, you can also hire a financial forensics expert to help you trace your separate funds. If both attempts fail, then you have no option but to divide the commingled properties just as you would divide community property.

As you can see, it is easy to commingle property and difficult to separate them after some time. If you are facing such a situation, consult a family lawyer for further advice on how to handle your property division.

Contact a firm like Scott & Scott, PC to learn more.