The ideal divorce – Commingling – The problem with distinguishing between separate and community property is that the two often become mixed during the marriage, a process known as “commingling.” For example, the husband entered into a marriage with a hefty savings account. He then opened a joint savings account with his spouse and transferred the separate savings into the new joint account. Both husband and wife used this account exclusively, making withdrawals and deposits on a regular basis. In the event of a divorce, it would be difficult to distinguish the husband’s original savings from the existing balance in the account because the marital estate has blended the money, treating it as community property.
Tracing is about detailing the supporting transactional evidence necessary to distinguish separate property from community property. It is about proof. Property purchased or exchanged for separate property is and remains separate property. Mutations and changes in the form of the property do not affect its character as separate or community.
Just as the division of any other community property, there is a need to determine the rights of each party with respect to retirement accounts that are award the accounts that are not pre-empted by ERISA to each perspective spouse, including but are not exclusive to pension, 401K, annuity, insurance policies (other than life insurance policies), individual retirement accounts, stock options, and savings. In determining the parties’ rights, it is necessary to identify all capital gains and losses, interest and dividends, fees and expenses and withdrawals that occurred during the marriage.