Surprises When the Marriage Ends

The commingling of assets — the mixing of assets, separate and marital during the course of the marriage — makes for problems in equitable division when the marriage ends.

Very often, during the happier times of the marriage young couples pool their money, taking a “what’s mine is yours and what’s yours is mine” world view about their finances. For example, young couples frequently put all the cash they receive as wedding gifts into a pot with the idea that down the road they will use it for a house. During the happy times, neither spouses worries about ownership because “the money is ours,” but commingled property makes for surprises when it is divided in a divorce. Commingling, which is also called transmutation, can happen as a result of a transfer by contract, gift, or a mere change in legal title.

Money in the marital pool often becomes joint property. For example, a money gift to one spouse, which normally is the separate property of the person who received it, deposited in an account in both names become commingled property and may become a gift to the marriage, i.e., both parties.

Gifts between spouses can become very problematic, too. Even property that entered the marriage separate or immune sometimes ends in the pot because spouses, during the happier times, taint their individual claims of ownership by putting it in joint names. Rufus thought he and Rhonda belonged to ages when, on her birthday, he gave her that Picasso print (purchased with an inheritance, which is his separate property) she now claims is her separate property (hence 100 percent hers) and he says was a gift to the marriage (hence subject to distribution).

Unraveling commingled property often becomes like unmaking a martini or unscrambling an egg when it comes to the division of the marital home.
The purchase of the home very often involves the use of separate property (funds brought to the marriage by one party), gifts to the couple (from one or both parents), loans to the couple (again from one or both parents), and funds that one or both made toward the purchase.

Courts wrestling with classification of property conveyed from one spouse to the other must decide if the transfer is a contract, and if not a contract, a gift, and if a gift, one that is marital or one that is separate property. It sounds hard and it can be even harder to do, as is illustrated by Rufus’s Picasso print.

Unscrambling the egg of commingled property frequently demands good legal advice. Case law in jurisdictions varies on this subject.

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