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What does it mean to commingle assets?

On Behalf of | Oct 8, 2020 | Divorce |

Some assets are intended to remain separate, even with married couples. In a divorce, this means that only one person has a claim to that asset and they do not have to split it with the other while dividing up what they own.

Perhaps the most common example is an inheritance. While the parents who leave money to their child may like the spouse and even consider them part of the family, they clearly intended to leave their savings to their own child. If that child and their spouse get divorced, an inheritance will typically be considered separate property. The ex-spouse cannot simply take half of the parents’ money.

That said, it is important for the person who received this money to keep it separate. If they commingle it, that can change the status. It may then be looked at as a marital asset and need to get divided with the other joint assets.

Commingling is essentially the process of mixing the assets together or combining them.

For example, perhaps the couple has a joint bank account. They use that account to pay the bills. When they get the inheritance, they just put it in the bank account. It is now mixed with their monthly earnings and may need to get divided with the rest of that account in a divorce. If they had kept the inheritance in its own account, it could remain with the person whose parents left it for them.

Part of the reason for this is that the lines become harder to define if the assets are mixed. Say the couple was paying their mortgage out of that bank account. If the inheritance money was in the account, who is to say if the actual money they sent to the mortgage lender was from the inheritance or from the monthly paychecks being deposited? It’s impossible to determine — and both people would probably give opposite answers — so this mixed account belongs in full to both people.

A divorce can raise many complex financial questions. Those involved need to make sure they understand their rights, the legal options they have and what types of precedents have been set to determine how asset division will be conducted.