Dividing assets during a divorce can be one of the most contentious and complex aspects of the process. In Virginia, the distinction between separate and marital property is crucial in determining how assets are allocated when spouses go their separate ways. However, when a married couple commingles separate assets—mixing them with marital assets—those separate assets can lose their distinct status and become marital property, subject to equitable distribution in a divorce.

Under Virginia law, separate property refers to assets acquired by one spouse before the marriage or received individually through inheritance or gifts during the marriage. Marital property, on the other hand, includes assets acquired by either spouse during the marriage, regardless of how they are titled. During a divorce, marital property is subject to equitable distribution, meaning that it will be divided based on an agreement between the spouses or a decision by the court. Should the case go to trial, the judge reviews several factors and distributes the assets and debts based on what they think is fair. The outcome does not have to split value evenly between the parties. 

Separate property, in theory, reverts to the original owner during a divorce. However, this distinction can become blurred when separate property is mixed with marital property in such a way that it becomes difficult, if not impossible, to distinguish the two. This often happens unintentionally, such as when a spouse deposits inheritance money (separate property) into a joint bank account used for household expenses (marital property). Other common examples of commingling include using separate funds for home improvements on a jointly owned house or combining retirement accounts.

Once separate property is commingled, it can lose its status as separate property and be reclassified as marital property, making it subject to division in a divorce. In Virginia, if a spouse wishes to claim that an asset remains separate despite commingling, they must provide clear evidence through a process called "tracing." Tracing involves documenting the source of the funds and proving that the separate portion of the asset can be identified and separated from the marital portion.

This can be particularly challenging if the commingling has occurred over a long period, with multiple transactions and no clear record-keeping. Without sufficient proof, the court is likely to classify the entire commingled asset as marital property.

To avoid the risk of commingling, it is essential for individuals in Virginia to keep separate property distinct from marital property. This can be done by maintaining separate bank accounts, avoiding the use of separate funds for marital expenses and keeping detailed records of all transactions involving separate assets. A prenuptial or postnuptial agreement can also help protect separate property by clearly defining what assets remain separate and under what conditions they might be considered marital property.

Harding, Harding & Harding Attorneys at Law, PLC advises Virginia clients regarding potentially commingled assets and other aspects related to the division of marital property during a divorce. For a free consultation, 757-499-2600 or contact us online. We are located in Virginia Beach, Chesapeake and Norfolk.