Family Matters.
When It Really Matters.

How does commingling affect my property if I divorce?

On Behalf of | Dec 7, 2022 | Community Property Division, Divorce

Some married couples in Carlsbad open a joint bank account and share finances the moment they say, “I do.” Other couples choose to keep things more separate, maintaining separate bank accounts and deciding who will pay which bills.

There is no right way to handle money while married. But if your marriage is ending and divorce is on the horizon, you should know that California law recognizes two types of property: separate property and community property.

Community property versus separate property

Community property is anything bought, earned or otherwise acquired by either spouse while married. Separate property is anything owned by one spouse prior to marrying, along with inheritances and gifts, even if acquired while married.

Why is this important? If a couple divorces, their assets and debts will have to go through the property division process and it makes a difference which assets are community property and which are separate property.

Under California law, both spouses have an equal ownership right to all community property, regardless of who purchased it or whose name is on the title. So, community property will generally be split evenly between the spouses.

Separate property, on the other hand, remains in the hands of the spouse who owns it. It is not subject to property division unless it has commingled with community property.

What is commingling?

Commingling occurs when separate property becomes so entwined with community property that it is no longer possible to identify what is separate and what is community. If this happens, the property loses its separate nature and transforms to community property that both spouses have a right to in a divorce.

There are some ways to avoid commingling. One way to avoid commingling is to keep separate funds in separate bank account and do not use these funds for marital expenses.

If you are concerned about your separate property prior to marrying, you and your spouse can enter into a prenuptial agreement.

In a prenuptial agreement, you can outline which assets will be considered separate property and which assets will be considered community property in the event of a divorce.

It sometimes is very difficult to determine what assets are community property and what assets are separate property. It can take a professional familiar with the law to sort things out to ensure the property division process is fair.