Property division and the commingling of assets

It is not unusual for spouses in Colorado to have significant assets coming into a marriage, particularly if they marry at an older age. For example, they may own a home or business prior to getting married. However, what happens to these assets should the couple later divorce?

In general, assets obtained during the course of the marriage are marital assets and are included in the divisible estate should the couple divorce. If a party owns a piece of property prior to getting married and keeps it wholly separate during the course of the marriage, should they divorce they will retain that property as a separate asset, and it will not be subject to property division.

However, if a separate asset combines, or “commingles” with marital assets, that separate asset could become marital in nature and thus subject to property division. For example, if separate assets are placed in a joint bank account or are used to purchase marital property or pay for marital expenses, those separate assets have become so commingled with the marital assets that it becomes impossible to separate the two. Thus, the separate assets are now marital asset. In addition, if a separate asset grows in value while the couple is married due to either party’s efforts or funds, the increase in value (also referred to as appreciation) will be deemed to be a marital asset, and thus will be divided as such should the couple divorce.

So, if a party wishes to retain separate property in the event of a divorce, they must be very careful not to commingle separate assets with marital assets. A prenuptial agreement can be one way to ensure that separate assets remain separate. In the absence of a prenuptial agreement, it is important not to use separate assets for marital expenses or placed in joint accounts. This post provides only a general overview of commingling assets in a divorce and does not provide legal advice. Couples with questions about how their assets will be treated should they divorce will want to seek professional guidance.