Post-Separation Tracing
/The case of Marriage of Simonis (2023) explains the courts approach the tracing of commingled assets in divorce proceedings, particularly during periods of separation.
Background: In Marriage of Simonis, the husband and wife were involved in cattle ranching and farming. The dispute centered around the characterization of cattle and proceeds from crops as community property or the Husband's separate property after their separation. During the separation, husband controlled the assets and commingled the cattle cash and income with his separate property later claiming that the remaining cattle were his separate property.
Legal Challenge: husband sought reimbursement for community debts he paid with commingled funds. He used an aggregate analysis for post-separation payments, arguing that the community debts he paid exceeded the community assets he held.
Trial Court's Decision: The trial court rejected this aggregate approach, adhering to the principles set in See v. See (1966). It required husband to demonstrate that all community property in his possession was exhausted when he paid each community debt, which he failed to do. Consequently, the court denied reimbursement and found the remaining cattle to be community property.
Court of Appeal's Ruling: The Court of Appeal affirmed the trial court's decision, holding that rules used to trace property acquired and expended during marriage are also applicable in characterizing property acquired and expended during a period of separation. The Court reviewed and supported the use of “direct tracing” and “family living expense tracing” (also known as the “recapitulation” method) for both pre- and post-separation asset tracing, as well as for Epstein reimbursement claims.
Key Takeaway: This case underscores the importance of detailed tracing methods in establishing the separate or community nature of assets, particularly when there's commingling of funds. It reaffirms that spouses seeking reimbursement for postseparation payments from commingled accounts must employ traditional family law tracing methods.
The Simonis ruling emphasizes the importance of detailed tracing methods for both pre- and post-separation assets and debts.
It rejects aggregate analysis in favor of transaction-specific tracing to establish the nature of assets and liabilities.
The decision reinforces the requirement for a spouse seeking reimbursement for community debts paid post-separation to demonstrate that community assets were exhausted at the time of each payment.