Q: Is using seperate asset as collateral for a marital loan count as commingling?

A: California is a community property state, meaning that there is a presumption that all property acquired during the marriage, belongs to the marital economic community and is considered to be community property. The presumption is rebuttable, which means that the spouse who takes the position the property is NOT community property, has the opportunity to prove the property is their separate property. There is also a presumption that any property acquired prior to the marriage, is separate property.

Commingling presents challenges on many levels and the question you pose is not focused on the property (asset), rather you are asking about the liability that was taken out (and collateralized by the separate property asset).

Based on the facts you have presented, and presuming that you are asking only about the loan (and not the ETF), it is likely that the loan could be considered part of the marital economic community and a joint liability for both spouses. To the extent that you did not commingle community property funds (for example didn't deposit part of your earnings during the marriage into the ETF), it is likely that the ETF would remain your sold property.

Depending on the amount in question and overall value of the marital economic community, it's best to consult with a lawyer. They can review your specific situation, advise you on your options, and guide you through the process.

Here's what I can offer:

I can review the documents, paper-trail and nature of the funds/liability and advise you on next steps.

Ultimately, the decision is yours. If you have further questions or would like to schedule a consultation to discuss your case in more detail, please don't hesitate to contact me.

A: Under California law, whether an asset is considered separate or marital property in a divorce depends on how it is used and managed during the marriage. If you have a $100,000 margin taxable brokerage account that existed before marriage and you use the margin credit from this account to fund marital expenses, the account itself generally remains your separate property as long as it is not commingled with marital assets.

However, the margin loan taken out during the marriage could be viewed as marital debt, particularly if it was used to fund joint expenses or benefit the marriage. This means that while the original asset remains separate, the debt incurred from it may be considered a marital obligation.

In the event of a divorce, the separate account would typically remain your separate property, but the responsibility for the margin loan might be shared between both spouses if it was used for marital purposes. It's essential to maintain clear records and avoid commingling funds to ensure the separate nature of the asset is preserved.