When it comes to the division of property during a divorce or legal separation, the division of the property will be dependent on the specific circumstances of the divorce case and the state laws of the state in which the property division is occurring.
When it comes to state laws of property division, most states can be divided into either community property states, or a non community property state. Community property refers to any property that is accumulated over the course of the marriage.
The list of community property states is:
- Arizona;
- California;
- Idaho;
- Louisiana;
- Nevada;
- New Mexico;
- Texas;
- Washington; and
- Wisconsin.
In community property states, all property that belongs to a married person is classified as either community property or the separate property that belongs to one spouse. Then, during the divorce proceedings, community property is typically divided equally between the spouses, while each spouse keeps their own separate property.
All other states not listed above are non-community property states, otherwise known as equitable distribution property states. In an equitable distribution state, a court will attempt to divide the property in such a way that is most fair to each party involved.
It is important to note that the goal of equitable division of marital property is not to divide the property equally. The goal is to achieve a fair and comprehensive result for the parties involved.
Courts will generally consider the following factors when dividing property during a divorce equitably:
- The existence of a prenuptial agreement, if any;
- The length of the marriage or domestic partnership before filing for divorce or separation;
- Each party’s age, employment, health, and financial assets;
- The overall estate of each spouse;
- Any child custody, child support, or spousal support issues; and
- Whether or not there are any jointly or independently owned businesses, by one or both parties.
Once again, the goal of the court is to equitably divide marital property over the course of the marriage in an equitable distribution property state. In a community property state, marital property dictates that each spouse will have an equal share in community property, while separate property will be distributed in full to each party.
However, the division of marital property and identification of what is considered to be marital property or separate property, is not always black and white. In some cases, the spouses may commingle their separate property into their marital property, which makes the division of property more difficult. As such, it is important to understand the differences between separate and community property.
What Is Separate Property?
It is important to note that the exact definition of what is considered to be separate property will differ based on the laws of the state in which the property division is occurring. In general, separate property is defined as any and all property and assets obtained by an individual before marriage. Additionally, separate property also commonly includes any inheritance left to an individual, as well as any gifts obtained during the marriage that are addressed to one party.
Examples of common assets that are considered to be separate property include:
- Inheritances and gifts addressed solely to one party;
- Heirlooms, or valuable family items that were owned prior to the marriage;
- Any real or personal property owned prior to the marriage, such as a house, car, land, etc.;
- Any property acquired under a trust;
- Any property that has been declared separate under an agreement, such as a prenuptial agreement; and
- Any property obtained with the proceeds of an individual’s separate property that is not intended for the use or benefit of both parents.
- It is important to know that failure to trace the proceeds of the sale/conversion of separate property to a new piece of property is one common way in which separate property gets commingled into marital property.
What Is Community Property?
First, the terms marital property and community property are utilized interchangeably. In other words, the two terms both refer to any property or assets that were acquired by a party during the course of their marriage.
Examples of property that is commonly considered to be marital property includes, but is not limited to:
- Wages: Any income earned by either spouse during the marriage is considered to be joint income, regardless of whether it is deposited in a personal account or joint bank account;
- Marital Home: Real property, such as the family home, is considered to be community property;
- Furniture: Any furniture acquired during the marriage, such as couches, cabinets, and beds;
- Electronics: Computers, televisions, cleaning equipment, and any other electronics, acquired during marriage;
- Cookware and Kitchen Items: Appliances, kitchenware, utensils, and china acquired during the marriage;
- Jewelry and Art: Jewelry, artwork, and home decorations acquired during the marriage;
- Yard Care Equipment: Any yard care equipment such as mowers, trimmers, blowers, etc. that were acquired during the marriage; and/or
- Motor Vehicles: Any motor vehicles, such as cars, motorcycles, boats, scooters, or recreational vehicles that were acquired during the marriage.
What Is Commingled Property?
As mentioned above, commingled property is one party’s separate property that has been commingled or mixed into marital property. In other words, commingled property begins as separate property, but then becomes mixed with community property during the marriage. As such, commingled property exists in a vague property ownership status between separate and marital property. Because of this, there are often disagreements between two parties in a divorce matter as to who owns commingled property.
For example, one party may own a large amount of finances prior to the marriage that they then use to help purchase the marital home for both parties. In this case, the finances in their separate bank account were their separate property, but now the funds have been utilized to purchase a marital home, which is considered to be community property.
In fact, this is the most common example of commingling property. As far as how the courts will handle such a situation, that will depend on the laws of the jurisdiction in which the property division is occurring, as well as the specifics of the divorce case.
In general, it is up to the party claiming that the money used for the marital home is their separate property. In other words, the party that claims property as separate property has the burden of proving that it was from their separate property and remains their separate property. Generally, this can be done by tracing the funds back to their original separate account.
Another common example of commingling separate property is adding one spouse onto the other spouse’s bank account, or creating a joint bank account. When two spouses are working, any income that is earned during the course of the marriage is considered to be joint community property. Further, any expenses undertaken during the marriage are considered to be joint expenses.
As such, tracing each dollar amount back to one spouse’s separate share when taking into account joint expenses is often a difficult task. In fact, one spouse may employ the assistance of a financial expert witness in order to trace money back to separate property in some cases. Once again, it is the burden of the property alleging separate property to prove that the property is indeed separate property.
Do I Need an Attorney for Help With Commingled Property?
As can be seen, dividing property during divorce proceedings can quickly become complicated, especially when commingled property is involved. As such, if you are contemplating or actively undergoing a divorce, it may be in your best interests to consult with an experienced divorce attorney.
An experienced divorce lawyer will be knowledgeable on your state’s laws concerning property division and property ownership during a marriage. As such, an attorney will be able to help guide you through determining what a court will likely consider to be separate and community property. An attorney may also be able to help you execute a property division agreement with your spouse, which will result in saving you a significant amount of legal fees.
An attorney will also be able to help assist you with all of the other issues that may be present in your divorce case, such as issues surrounding children or spousal support. Finally, should a court hearing be necessary to determine the division of marital property, an attorney will also be able to represent your interests in court.
