The assets you owned before getting married are typically considered separate property in the event of a divorce. However, if you mix or commingle these assets with marital or jointly-owned property during the marriage, it can complicate the determination of what portion of the asset’s value remains separate property and what portion has become marital property subject to division in the event of litigation.
Commingling occurs when separate property funds or assets are mixed with marital funds or assets, making it challenging to trace and separate them out during divorce proceedings. There are several ways you can commingle separate property with marital property during a marriage. The following are a few of the most common.
Joint bank accounts
If you deposit separate assets into a joint bank account that you and your spouse worked to grow, for instance, inherited stocks, the original separate property can become commingled with marital funds. Over time, it becomes challenging to differentiate between the separate contributions and the court may consider the entire balance of the joint account as marital property subject to division in the event of a divorce, regardless of the initial separate property contributions.
Investments and assets
When one spouse invests separate funds in an asset and the other contributes effort or resources to increase its value, determining the portion belonging to each in a divorce becomes complex. For example, if you use separate funds to purchase an asset and your spouse contributes to its upkeep and improvement over the years, the increase in value of the asset might be considered marital property subject to division upon divorce even though the initial investment was made with separate funds.
Adding spouse as a co-owner or beneficiary
If you add your spouse’s name to assets or accounts that were initially separate property, such as real estate, retirement accounts or life insurance policies, it can lead to commingling. This action intertwines the separate property with marital property, complicating the determination of ownership and division in a divorce.
How do the courts handle commingled property in New York?
Once the court has determined that the commingled property is marital property, it will typically apply equitable distribution principles to divide its value in the event of litigated divorce proceedings. The court may order an equitable division of the commingled property, which may not necessarily mean an equal split but rather a division deemed fair and just under the circumstances of the case.
At The Law Firm of Poppe & Associates, PLLC, our focus is relentless advocacy for our clients. If you or someone you know is considering divorce, reach out to schedule a consultation at 646-665-3903 or by contacting us online.
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Mia Poppe, Esq.
Managing Partner
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