What is the definition of commingled property?

While most people believe the divorce rate in the United States is about 50 percent, the truth is vastly different. The actual divorce rate tends to be around 42 percent, but it is difficult to get an exact figure due to the numerous ways by which professionals measure it. 

In a divorce, each party will attempt to regain control of various assets. One aspect that frequently comes up is whether an asset should be "separate property" or "commingled property." It is critical to understand the difference so that you know what is off the table. 

Difference between separate property

Separate property is anything you own prior to the marriage. For example, if you had $10,000 in the bank prior to marriage, then that is yours. However, if you took that $10,000 and put it in a joint bank account both you and your spouse have control over, then it has turned into commingled property. Separate property will not require division in a divorce while commingled property does. 

Examples of commingled property

In the event you and your spouse purchase a house together and pay off the mortgage using funds in a joint bank account, then the house becomes commingled property. It is possible you purchased a house prior to a marriage, making a down payment with your own money. However, if you pay the ensuing mortgage with joint funds, then it will become commingled regardless.

Ways to avoid commingling assets

One of the simplest ways to avoid commingling assets is to set up a prenuptial agreement. You can state in the document which assets are separate and commingled as long as it is a fair distribution of assets. People can also make sure to only use their own personal money when paying off debts or making mortgage payments. You can keep the deed to a house in your name only as another course of action. 

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