When marriages fail and divorce proceedings begin in California, the process involves the division of assets owned by the couple. This often includes determining how to fairly distribute both community property (assets acquired during the marriage) and separate property (assets owned individually before the marriage or acquired by gift or inheritance).
In a litigated divorce scenario, sometimes the court may be at a crossroads on how to classify assets due to commingling. This occurs when separate property gets mixed with marital property, making it challenging to distinguish between what belongs to each spouse individually and what constitutes joint marital assets. Commingling can happen through various means, including the following.
Depositing separate funds into joint accounts
If one spouse deposits their separate funds such as earnings from before the marriage or an inheritance into a joint bank account shared with their spouse, those funds can become mixed with marital assets. Over time as the couple continues to deposit and withdraw money from the joint account for various expenses, it can become increasingly difficult to trace the original source of the funds and determine their separate or marital nature.
Using separate funds to pay for marital expenses
Commingling of separate assets can also occur when one spouse uses their separate funds to pay for marital expenses. For instance, if a spouse uses their pre-marital savings or inheritance to contribute to mortgage payments, household bills or other shared expenses during the marriage, those funds become intertwined with the marital estate. Similarly, if separate funds are used to finance joint purchases such as a family home or a vehicle, the lines between separate and marital assets can blur.
If you are divorcing and you may end up litigating your differences, know that seeking legal counsel can provide you with invaluable assistance in identifying and tracing separate assets, documenting financial transactions and presenting compelling arguments to the court regarding the classification and division of assets.