People preparing for divorce often face a number of challenges. They have to discuss financial matters with their spouses. If they have children, they have to work out an arrangement for the division of parental rights and responsibilities.
Many spouses manage to settle property division matters and can proceed with uncontested divorces. If they cannot reach an agreement, then the matter goes before a judge. Community property statutes leave most of the shared resources owned by spouses at risk of division when people divorce.
Divorcing spouses have to divide their marital property but can protect their separate property. Unfortunately, one spouse may claim that the other commingled their separate property with marital property, leading to increased conflict and a longer negotiation or litigation process.
What types of behaviors might constitute commingling for the purposes of community property distribution?
Depositing funds into a shared account
One of the easiest ways to commingle separate property with marital property is to put separate property into a shared marital account. An inheritance or money earned before marriage could be vulnerable to division during divorce proceedings if people put the funds into a shared bank account. Adding a spouse to the ownership paperwork for separate property can also give them reason to claim it as marital property in the event of divorce in the future.
Reinvesting marital income in separate property
Several types of separate property may require ongoing investments. Real property, for example, needs financial resources to pay for insurance and tax obligations. Businesses also typically require ongoing investment that could lead to allegations of commingling. The use of marital income or assets to improve or maintain separate property can also lead to claims of commingling during divorce proceedings.
Relying on unpaid services
Sometimes, the investment made in separate property does not come from marital income but rather uncompensated labor. Allowing a spouse to do work to improve real property could give them a credible claim to an interest in that property later. The same is true of asking the spouse to perform uncompensated work at a small business.
Seemingly small choices can have major implications for the outcome of property division proceedings under community property statutes. Spouses may need help avoiding commingling during marriage and addressing allegations of commingling during divorce proceedings, and that’s okay.