‘Commingling’ Assets and Its Impact on the Distribution of Property in a Maryland Divorce

People are waiting longer to get married. Statistics show that the average age of Maryland men marrying for the first time is roughly 30 and, for Maryland women, 29. That means that, whether you’re talking about a first marriage or a subsequent marriage, the odds are greater than ever that the spouses are entering the marriage with significant wealth. For many spouses-to-be, one important financial goal is to ensure that the assets they want to share are shared and the ones they want to keep separate stay separate. Proper planning is vital in this area because, as a knowledgeable Maryland divorce lawyer will tell you, a failure to handle these assets properly could result in a non-marital asset unintentionally switching to marital status in the eyes of the law.

A recent Montgomery County divorce case shows this concept in action.

In terms of determining which assets were marital and which were non-marital, the spouses agreed about their home, the cars, and the checking accounts, but they did not agree about certain annuity accounts.

At the center of this dispute was an annuity with the insurer Allianz. The wife contended that the annuity was marital property. The husband argued that the sum represented retirement funds he accumulated before he and the wife married and was therefore non-marital.

How Assets Can Convert from Non-Marital to Marital

The husband, however, had a major problem with regard to that annuity account… and that problem is something the law calls “commingling” of assets. Commingling happens when non-marital assets mix with marital assets. When that happens, the law generally will treat the entirety as marital in nature.

Commingling can happen in various different ways. Say your spouse entered your marriage with $50,000 in a savings account but, during your marriage, moved that $50,000 into a savings account you both shared and into which you both deposited marital funds. A court would likely rule that the savings funds had been commingled and all of the funds in the shared savings account are marital.

Additionally, say that your spouse entered the marriage owning rental property and continued to own that property in their name alone but that, during the marriage, they used marital funds to pay for improvements to those properties. That could constitute commingling and convert the properties (in whole or in part) from non-marital to marital.

Furthermore, if your spouse is the one trying to persuade the court that a disputed asset is non-marital, they are the one with the burden of proving that. If there’s not enough evidence, the courts will presume that asset to be marital.

In the Montgomery County case, even if the husband was correct about the Allianz annuity containing the husband’s non-marital retirement account assets, the evidence showed that it was also funded with money from a TransAmerica annuity that the court found to be marital property. That meant the Allianz annuity necessarily constituted commingled funds and, as a result, was a marital asset.

Whether you’re preparing for marriage (and the possible need for a good prenuptial agreement,) or preparing for a divorce (and a possible dispute about the distribution of assets,) you need advice and representation from knowledgeable legal counsel. The skilled Maryland family law attorneys at Anthony A. Fatemi, LLC are here to help. Contact us today at 301-519-2801 or via our online form to set up your consultation.

Contact Information