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Commingling assets and property division issues

| Jan 29, 2021 | Property Division |

There are many things that can complicate the process of property division in a divorce. At the top of the list is commingling assets.

Since Texas is a community property state, the law clearly draws a line between marital and separate property. However, it is possible for separate property to become marital property when the owners commingle the assets, according to Cornell Law School. At the same time, it is possible to commingle assets without turning them completely into community property.

Commingling defined

Commingling is when a couple mixes separate and community assets in a way that blurs the lines of ownership. Essentially, through this process, separate property can lose its identity of separate. A person must be able to trace ownership completely to prove something is separate property.

Mixing property

A common way that property comingles is when separate and marital money goes into the same account. According to the State Bar of Texas, the Texas Supreme Court ruled it is impossible to trace such an asset, but the ruling changed when the Court decided that proving the distribution and use of funds in the account could allow for the identification of separate funds.

The assumption is that each person draws from community funds first and then from his or her separate funds when accessing a joint account. Therefore, it is possible for funds to remain separate in the same account. The bottom line remains that as long as a person can trace their separate assets, even through commingling and other changes, it is possible for them to retain those assets outside of community property.

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