Commingled Accounts
Commingling, in the context of property division, means that community property and separate property are combined in some way. In this common situation, it is important to have a
Phoenix Divorce Lawyer helping you.
When community and separate property are commingled, such as in the case of financial accounts, the initial presumption is that the entire fund is community. See
Cooper v. Cooper,
130 Ariz. 257, 635 P.2d 850 (1981). In that case, upon divorce, the entire fund must be divided equitably. A spouse claiming the separate character of funds in such an account is held to the standard of explicitly tracing the funds. This must be shown by
clear and convincing evidence. If the identity of the separate funds can be traced, commingling of funds does not result in transmutation of separate property into community property. Nace v. Nace, 104 Ariz. 20 (1968). This is especially true where the community funds commingled are negligible compared to the separate funds.
Noble v. Noble, 546 P.2d 358.
Thus, it is important that there be sufficient records or evidence to trace the separate vs. community nature of the funds. Of course, in real life, many couples do not keep such records. Furthermore, even if separate funds are traceable, the court will consider them to be community property if they were treated as community property by the owner. Laughlin v. Laughlin, 61 Ariz. 6 (1943). Finally, if separate funds are traceable in the commingled account, there is a presumption that payments of separate debts from commingled funds are from the separate portion of such funds
. Blaine v. Blaine, 159 P.2d 786 (1945).