What is a Commingled Account?

When two people get married, the last thing on their mind is keeping non-marital accounts separate from their marital property in the event of a divorce.  In fact, divorce is probably the last thing on their minds.

Commingling is the combination of marital and non-marital property, converting the account into a marital account.  In other words, a party may deposit his/her income into an account he/she had prior to the marriage, converting the account into a marital account subject to a 50/50 division at the time of the divorce.  It does not matter at that point that the majority of the money in the account was acquired prior to the marriage.  Any funds deposited into a marital account automatically become marital property even if the funds are non-marital (i.e. an inheritance or non-marital lawsuit).

This fact is surprising to many, especially if the marriage only lasted two years, and now their non-marital savings are subject to equitable allocation with their ex-spouse.  The best way to prevent commingling is to sign a pre-nuptial agreement indicating what accounts are non-marital property and waiving any rights or claims to any funds transferred to that account even if it’s a party’s earnings.  In fact, a pre-nup is a good way of creating a road map as to how the parties will handle their financials and prevent an acrimonious divorce.

The second-best way to avoid the commingling of accounts absent a pre-nup is by keeping your non-marital property separate from your marital property.  This would require accurate records showing that all funds deposited into the accounts came from non-marital sources, including the party’s income.  This is a common mistake in divorces as people often think its “their” paycheck.  A spouse’s paycheck is marital property and should be deposited only into a marital account, whether it’s a joint account or not.

Speak with an attorney about obtaining a pre-nuptial agreement, a post-nuptial agreement, or if you have doubts as to whether an account has been commingled or not.