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What is Commingling of Assets?

Posted By Posted by Damien McKinney on Jul 24, 2014 11:05am PDT || Jul 24, 2014

In general, if a party commingles a non-marital asset with a marital asset, then the non-marital asset converts to a marital asset and becomes subject to equitable distribution in a divorce. One of the simplest versions of commingling occurs when one party receives inheritance from a deceased family member in the form of cash. This would normally be considered non-marital property because it was inherited. However, when that party places the funds into a joint bank account that is owned together with the spouse, then it will typically be considered a commingled asset and the spouse is now entitled to one half of that asset.

A recent fourth district court of appeals case dealt with this issue. In Sorgen v. Sorgen, the Wife inherited one third interest in a home with her sisters prior to marriage. The Wife bought the sister's each one third interest and owned the home on her own after the marriage. Several years later, the Wife sold the home and put the proceeds of the sale into a joint account held by her and her Husband. The Husband and Wife used the joint funds to execute stock trades. When the Husband petitioned for dissolution of marriage, the Wife removed the funds from the joint account and placed them into her separate account.

The parties went to trial and the trial court ruled that the funds were the Wife's non-marital property and not subject to equitable distribution. The fourth district court of appeals disagreed and reversed the trial court's ruling. The fourth DCA held that the proceeds of the sale of the home were commingled into the parties' joint account and became a marital asset at that time.

The appellate court stated that when the Wife deposited the funds into the joint account, that she created a presumption that the funds were a gift of an undivided one-half interest in the funds to the husband. There was no evidence to rebut that presumption. Therefore, the funds became marital funds and the Husband was entitled to one half.

Many clients do not realize that simply placing inherited funds into a joint account subjects those funds to equitable distribution, when they normally would not be subject to division if they had remained in a separate bank account in the one party's name only. If there is any doubt whether funds received by you are marital or. non-marital, it is always advisable to err on the side of caution and place the funds into an account that is in your name only. If you believe your spouse may have commingled non-marital funds into a joint account, contact your expert family law attorney today to discuss your rights and responsibilities regarding those funds.

Categories: Assets

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