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Commingling property can be costly during divorce

| May 24, 2021 | Divorce, Family Law |

Couples who marry often want to share everything they have with their spouse. The exceptions, of course, are those who draft a prenuptial or postnuptial agreement, and these can protect certain assets. Over time the couple may come to realize that their individual property was commingled. Usually, this is no big deal, but the couples come to find out later while filing for divorce that they no longer outright own the house they bought before a marriage or a business they started before the marriage.

Marital assets versus individual ones

Spouses will have shared assets or a marital estate composed of all assets accrued (unless an agreement says otherwise) during the marriage. Individual property is assets like real estate, artworks, cash or assets accumulated before the wedding. The individual can keep the assets separate by making car or mortgage payments from an individual account rather than a joint account. They become commingled once marital assets like cash go towards making payments, or sweat equity helps improve a business. Also, the same principle is true if one spouse brings debt to a marriage.

Examples of commingling:

  • Using a joint bank account to repair a vehicle.
  • A spouse works at or conspicuously contributes to the success of a business.
  • The spouse allows the owner to plow all their salary into building up the business).
  • A private business becomes incorporated during the marriage.
  • A spouse increases the value of a property by contributing money or sweat equity.

There are a few exceptions that remain individual, including money from a lawsuit or inheritance.

Valuing assets

Spouses assign value during the inventory of the marital estate. Since Colorado divides property in a fair and equitable manner, this is often an uneven percentage of value attributed to their assets. Assets like a business, real estate or collections will often need valuation experts, which can more accurately determine value. The couple or the courts will then determine the overall ownership percentage of the marital or commingled property.

Finding an equitable solution

The couple can determine a percentage of ownership and then divide assets, sell them or keep them. Depending upon the size of the marital estate, it can get complicated. This is one important reason why hiring a knowledgeable family law attorney can protect a spouse’s interests and rights even if they choose not to litigate their divorce in court.