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What happens to commingled assets during divorce?

On Behalf of | Jan 23, 2024 | Divorce

Most of the time – unless spouses can agree to alternative arrangements without judicial intervention – assets acquired by either spouse during the marriage (that are not separate assets) must be divided when a couple divorces. This includes salaries, bonuses, retirement accounts, homes, businesses and cars. Separate property, like assets owned before the marriage, gifts or an inheritance are generally not subject to division.

This process sounds pretty straightforward, but the distinction between marital and separate property is not always clear-cut. Spouses may intentionally or unintentionally mix or commingle their separate and marital assets, thereby potentially changing their status.

For instance, you may use separate funds to buy or improve marital property or deposit separate funds into a joint account. When your separate assets are commingled, they may lose their original identity over time and become part of the marital estate. It means they will be treated like other marital assets and divided accordingly. As a result, if you are divorcing, you could lose out if assets you believed were yours alone are divided between you and your ex due to comingling.

Taking proactive measures to protect your financial interests

While commingled assets can present challenges during the property division process, you should not sit back and resign to fate. Taking proactive steps can help navigate the complexities associated with these assets during divorce.

It all comes down to following the paper trail with the aim of establishing the separate identity of commingled assets. Gather detailed financial records to establish the origin and purpose of separate and marital assets. Bank statements, receipts and other relevant documentation can paint a clearer picture. Remember, separate assets that have been commingled but can be traced back to their original source will not be considered marital property.

Seeking legal guidance for an informed evaluation of your situation can help you determine the most effective strategies to safeguard your financial interests and ensure you do not get the short of the stick when the dust settles.