Commingling assets in marriage is when you and your spouse combine your separate and community property. This happens in both purposeful and indirect ways.

The “what’s mine is yours” mentality is sweet in theory, but it can have unintended financial consequences.

Here’s what commingling means for your property and how to trace assets if you get in a bind.

Community Property vs. Separate Property

Before entering marriage, any property, assets, or debts you have are owned solely by you. This is known as separate property, and it accounts for everything from the money in your savings account to your student loan debt.

When you marry in a community property state, you and your spouse presumably jointly own any property you acquire during marriage (unless specified otherwise in a prenuptial agreement).

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It doesn’t matter if only one person pays for an asset or applies for a loan. That property or debt is presumed to be community property in the eyes of the law.

When it comes to commingling, separate property may become community property when you blend the two to the extent that it’s impossible to see what was separate vs. community property.

Examples of Commingling Assets

Two pieces together

The line between separate and community property is easily blurred over the course of a marriage.

Here are a few examples of how this happens:

  1. Mixing Money in Bank Accounts

Commingling occurs when you and your partner deposit your individual earnings during marriage into an account you previously had before marriage, which is then used for collective expenses such as mortgage payments, household bills, and other joint financial obligations.

  1. Property Ownership and Mortgage Payments

Consider a scenario where one spouse owns a property before marriage. Post-marriage, both spouses may contribute to mortgage payments from a joint account or participate in home improvements using shared funds.

This collaborative financial contribution towards the property’s maintenance and mortgage payments can transform what was once separate property into a marital asset in which the community may hold an interest.

  1. Mortgage Refinancing Involving Both Spouses

In cases where one spouse owns a property with an existing mortgage, refinancing the mortgage with both spouses as co-signers is a form of asset commingling since the refinance proceeds are presumably community property.

This action demonstrates a shared financial responsibility and interest in the property, potentially converting it from an individual asset to a joint marital asset.

  1. Combining Investment Portfolios

Married couples may merge their individual investment portfolios into a single account.

This unified approach to investment involves making joint decisions on the buying and selling of assets, utilizing combined funds. This signifies the blending of separate assets into a commingled investment portfolio, reflecting the joint financial interests of the couple.

Why Does Commingling Matter?


Commingling assets matters because it may cause the characterization of your property to change, often without you knowing.

You may assume the condo you bought before marriage is all yours, but if your spouse puts money towards renovations or upkeep during marriage, they may gain an interest in your condo in the event of a divorce.

Fortunately, there are ways to trace commingled assets to determine their true ownership.

Tracing Commingled Assets

Tracing commingled assets is a complex process often handled by forensic accountants, especially in legal cases such as divorce.

The goal is to distinguish and identify the separate property from the mixed (or commingled) assets in a way the court will accept.

Here’s how a forensic accountant typically approaches tracing commingled assets.

Gathering Documentation

Gather documentation

The first step involves collecting all relevant financial documents.

This includes bank statements, investment accounts, property records, purchase receipts, and any other records for the relevant time period that can provide a trail of the asset’s origins and movements.

The more comprehensive the documentation collected, the more accurate the tracing will be; therefore, always try to keep all of your bank and financial statements during marriage in case you ever need to refer to them.

Identifying the Initial Source

Forensic accountants examine the gathered documents to identify the initial source of money used to purchase the assets in question.

This involves determining whether the assets were initially purchased with separate property (owned by one party before a marriage or partnership) or community property. When the original source is commingled, it may get complicated, and further analysis and tracing methods are necessary.

Analyzing Transactions

With all relevant information collected, the forensic accountant analyzes the flow of transactions to understand how the commingling occurred. This could involve tracking deposits, withdrawals, and transfers between accounts to see how separate and joint assets were mixed.

Employing Tracing Methods

Several methods can be employed to trace commingled assets back to their original characterization, depending on the situation’s complexity and the available documentation.

Common methods include:

The Source Method: Tracing funds back to their original source to determine their nature (separate or communal).

The Direct Tracing Method: Identifying specific assets purchased with separate funds, even if those funds have since been commingled.

The Exhaustion Method: Used when separate funds are deposited into a commingled account and then withdrawn. It’s assumed the community funds are the first to be withdrawn and separate funds are the last.

Establishing Separate vs. Commingled Assets

The forensic accountant aims to delineate which portions of the commingled assets can be legally considered separate property and which are community.

This involves a detailed and methodical breakdown of the asset’s history, supported by documentation and analysis.

Preparing a Report

Prepare a Report

The final step is to compile a detailed report of the findings, which includes the methods used, analysis performed, and conclusions drawn regarding the nature of the assets.

This report is crucial for legal proceedings as it provides a basis for negotiations, settlements, or court decisions.


Tracing commingled assets can be particularly challenging due to incomplete or missing records, the passage of time affecting the availability of documents, or the intentional obscuring of transactions.

Forensic accountants must use their expertise to navigate these issues, often employing assumptions or estimations when direct evidence is unavailable.

Save The Headache, Get A Prenup

Save the Headache

You can see how separating years and sometimes decades of property can become complicated and contentious.

The most effective way to skip all the drama is to determine the characterization of your property ahead of time with a prenup.

With a prenup, you and your spouse-to-be jointly determine who owns what property, how community property will be created (and possibly more importantly, how community property will NOT be created), so in the event of divorce, you avoid the back-and-forth of who’s entitled to which assets.

It’s an excellent method for getting on the same page about finances while building in insurance that you won’t get in a bind down the line.

Schedule a consultation call with me today to learn more about how prenups support your financial goals and your marriage. I’m big on equipping you with the knowledge and tools to enter a successful marriage built on transparency and open communication.

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