Commingling Separate Property (AKA Commingling Assets)

Posted: 10 October, 2023

Most people entering marriage want to share everything. That is normal. No one begins a long-term, committed relationship with plans to separate. Sometimes these things just happen. You can’t always help it if you and your spouse grew apart instead of together.

As a result of newlywed bliss, issues come up with commingling assets later on. They don’t typically become issues until your divorce lawyer has to explain to you why the house you bought when you were single is now community property even though you exclusively paid for it.

The most prominent issues with commingling assets are that if you don’t have excruciatingly detailed records for the entire life of the account, it’s nearly impossible to separate the assets when dividing the property. As a result, the property that started out as yours now counts as community property and gets split 50/50 with your spouse.

Unlike the calculations for alimony, Nevada has a simple rule for dividing assets in a divorce. Each spouse gets half of the community property.

Commingling Definition in Marriage

Commingling is using community funds for separate property or contributing to separate property.

A typical example is using your joint bank account to pay for a home you bought before marriage. Another example could be depositing money from an inheritance (separate property) into a joint bank account (community property.)

The State of Nevada considers any money you make after the marriage as community property. So it can be challenging to keep separate properties separate.

As an idea of the comprehensiveness of community property, all of the following count:

  • Houses or other real property bought after marriage
  • 401(k) or pensions, contributed to after marriage
  • IRAs and other investment accounts contributed to after marriage
  • Your income after marriage
  • Vehicles purchased
  • Guns

Commingling Assets – Risks

Commingling assets and accounts can hurt the property owners. Aside from splitting assets 50/50 during a divorce. Even if you agree to an uncontested divorce and divide everything in mediation, the property division can fall out differently than you may have hoped.

If you choose to combine accounts that involve your credit score, you can end up damaging your credit score. If something happens and your partner defaults on payments or skips out of town with the assets, then your credit score suffers. This is another reason that it can be wise to keep your accounts separate.

Perhaps the biggest and most challenging issue with commingling assets is what happens if there is a divorce or legal separation. Unless you keep exacting records throughout the entire life of the account, it is nearly impossible to separate the assets and restore them to their rightful owners. The best divorce lawyer int he world cannot restore your property to you without these records.

Detailed records, including receipts, bills of sale, titles, and any record that applies to the asset must be kept on file. Most people don’t have the time or resources for this. Plus, it is basically impossible to reconstruct these records.

Commingling Assets – Benefits

Commingling assets does have its benefits, though.

If something happens to you, your partner or spouse can take control of the assets. This avoids dealing with a long, drawn-out legal battle or issues with relatives.

Likewise, if you are the survivor, it will benefit you to have control of the accounts. Losing a loved one is never easy, and having your accounts under your control will give you one less thing to work about if the unthinkable happens.

Property Acquired Before Marriage

Property acquired before marriage is technically separate property.

Of course, it falls into the commingling category if you pay for it with community funds. (i.e., your paycheck after you get married.) If you have property you are concerned about, speaking with a divorce lawyer (even if you don’t plan on ever getting a divorce) can advise you on how to keep your assets from falling into the community property category.

If you inherited your property, then it counts as separate property, even after marriage.

Keeping Assets Separate in Marriage

Without compulsive record keeping, it’s nearly impossible to keep assets separate when you fund them with community property. It doesn’t matter whose name is on the title.

If you must keep your assets separate, then consider a prenuptial or post-nuptial agreement. Most people familiar with pre-nups, but post-nups are gaining popularity. Your divorce lawyer will use an agreement like this to prevent your property from being unfairly divided with your ex.

It can also be smart to work with a post-nuptial agreement instead of a pre-nuptial. When judged look at these agreements during a divorce, a case can be made for signing under duress. (An upcoming wedding for example.) Post-nuptial agreements avoid this entirely.

Another way to keep assets separate in marriage is to have a signed and notarized agreement with your spouse. It doesn’t have to be extremely fancy or drawn up by an attorney. Although having an attorney draw up the agreement avoids potential legal pitfalls.

Just make sure any agreement you work out with your spouse is in writing, extremely specific, and notarized. It’s more efficient than trying to keep assets separate and having the paper trail to back up those separate properties.