One of the reasons why dividing property in a divorce can be such a confusing process is that it is not always clear what money or assets are eligible for division. In Washington, we have community property laws, meaning spouses will generally split marital property 50/50.
However, complications arise when it is unclear whether specific property or funds are community or separate. One reason for this is commingled assets.
Examples of commingling
Broadly speaking, commingling assets means combining assets, which can happen when two people get married and start sharing bank accounts, for example.
It can also happen if one person acquires property like an inheritance while married. Traditionally, this would be separate property if it is given to just one spouse. However, if the recipient takes that money and deposits it into a shared account, it can be commingled.
Similarly, commingling can occur if parties use marital funds to improve or pay off separate property, like a home one person owned before marriage.
Avoiding and dealing with commingled assets
Because most people will have commingled assets upon divorce, knowing how to deal with these properties is crucial.
In most cases, spouses – typically with the help of their attorneys and financial professionals – will trace the assets to determine how much of the funds are separate. This process can be complicated and generally involves scrutinizing receipts and transaction histories.
Those wishing to avoid the issue of commingled property can keep any separate money or property truly separate. If parties cannot or do not do this, maintaining diligent records on separate assets and transactions involving separate funds or properties is crucial. Having a prenuptial agreement with this information can provide valuable protection and guidance.
Tracing and categorizing property in a divorce can be tedious and complex. However, doing so is vital to dividing eligible property fairly upon divorce.