Beware the Dangers of Commingling Assets

Beware the Dangers of Commingling Assets

By: M. Scott Gordon

In theory, the task of property division in an Illinois divorce should be simple: Each party walks away from the divorce with all property they had acquired prior to the marriage along with any property they received by gift or by inheritance. Any property the couple acquired during the course of the marriage, or any property one of them had acquired before the marriage but thereafter titled in both of their names, would be divided equitably and fairly between the parties.

In reality, property division can be an extremely contentious and confusing process, especially where the parties do not agree as to whether a particular item of property is a marital asset subject to division or a non-marital asset.

How Could There Be Confusion Between a Marital or Non-marital Asset? 

It would seem that the delineation between what constitutes a marital asset and what constitutes a non-marital asset is rather clear. How, then, can property division become contentious and legal battles be fought over how to classify a particular asset or item of property? There are several situations in which a non-marital asset loses this designation and becomes a marital asset at some point during the marriage. One of the ways this can occur is through the process known as commingling.

An Example of the Dangers of Commingling Assets

Commingling occurs when a non-marital asset (typically cash) is combined with a marital asset in such a way that it is impossible to tell the two assets apart. The classic example of commingling involves a spouse who receives $5,000 in inheritance and promptly deposits the check in the joint checking account the spouse shares with her partner. Over the next several years, other money is deposited into the account and money is withdrawn from the account to pay for household expenses. When the couple divorces after several years, the joint checking account has a balance of $6,000. The spouse’s partner would have a strong argument that commingling has occurred and the entire balance of the checking account should be equitably divided.

The spouse’s partner’s argument in support of such a proposition would point out that since the $5,000 was deposited in the joint checking account the balance of that account has risen and fallen as the economic situation of the spouses has changed and as bills have been paid. There is no way for a court to determine whether any part of the $5,000 inheritance remains or whether the inheritance was spent paying for the couple’s expenses.

How to Avoid Problems with Commingling 

One of the easiest ways to avoid potential commingling problems in the future is to keep all separate property truly separate. If you receive an inheritance or a gift of cash, for example, deposit this money in a separate account that belongs only to you.

Gordon & Perlut, LLC’ team of Chicago property division lawyers are well-versed in the difference between marital and non-marital assets and are ready to assist you in helping you achieve a swift and satisfactory resolution to your property division battles. Contact either us at either our Chicago or Skokie offices by telephone to enlist our services, or complete and submit our online form.