What Is Commingled Property and How Can It Impact an Austin High Net Worth Divorce?

 Posted on August 06, 2020 in Complex Property Litigation

The division of community property is a complicated process in any Texas divorce, but it is often particularly complex in high asset divorces in the state. If you are planning for a divorce or you have just begun the process of filing, you probably already know that, under Texas law, Texas is a community property state. What does this mean for your divorce and your property? In short, most property acquired after the date of the marriage will be classified as “community property,” or property of the community (the community being your marriage). Property acquired prior to the date of your marriage, as well as certain property acquired after the date of marriage, will typically be classified as separate property. In Texas, community property is divided in a divorce in a manner that is “fair and just,” according to the Texas Family Code.

What, then, is commingled property? The term commingled property refers to debts or assets that have characteristics of both separate property and community property. In a high net worth divorce, dealing with commingled property can get complicated, but an aggressive Austin high asset divorce attorney can help. In the meantime, we want to provide you with more information about commingled property and to discuss how courts handle it.

How a Court Will Handle Commingled Property in a High Asset Divorce

How will a court handle commingled property in your high asset divorce? The answer to that question depends largely on just how commingled the property has become. The level or amount of commingling will probably depend upon a few different factors, including, for instance, the type of property and the length of time for which it has been commingled. If the court can trace out, or separate, the community property from the separate property, it will likely do so. However, if the property is so commingled that it is not feasible to determine what amount of the property is community property and what amount is separate property, all of the commingled property could end up being classified as community property and divided between the spouses.

In high asset divorces, stocks and other investments that commingled can present particular complications. Stocks, as you likely know, are easily bought and sold in a variety of ways, and dividends from stocks can end up being deposited into community or separate accounts, or ultimately could be used for additional investments in stocks. As such, investments like these, as well as ETFs and mutual funds, can make for complicated classifications. Investments in real estate, too, can be especially complicated in high asset divorces, especially when the spouses have used a variety of funding sources to purchase real estate and to do renovations.

How Does Property Get Commingled?

How does property get commingled? This happens when one of the spouses mixes separate property with community property.

To use the example of stocks mentioned above, imagine that, prior to the marriage, Spouse 1 invests in a number of stocks. Those stocks pay dividends both prior to the marriage and during the marriage. The dividends paid during the marriage may be classified as community property by virtue of when they are paid out, but even if they are classified as separate property, imagine Spouse 1 takes the dividends and, along with community assets, invests in other stocks or mutual funds. Those stocks then pay out dividends, and the spouses use the dividends to invest in a high-end art collection. As you can see, tracing out separate and community property can get incredibly difficult.

Contact a Texas High Net Worth Divorce Lawyer

Do you need help with your high net worth divorce and commingled property? A skilled Austin high asset divorce lawyer can speak with you today. An experienced complex litigation attorney or complex child custody attorney can also assist with your case. Contact Powers and Kerr, PLLC online or call us at 512-610-6199 for more information about our services.

Source:

https://statutes.capitol.texas.gov/?link=FA