Commingling refers broadly to the mixing of funds belonging to one party with funds belonging to another party. It most often describes a fiduciary’s improper mixing of their personal funds with funds belonging to a client. This form of commingling violates Rule 1.15(a) of the Model Rules of Professional Conduct, which states that lawyers must keep their clients’ property separate from their own property. This District of Columbia Court of Appeals case explains that rules against commingling are not only to prevent an attorney’s misappropriation of client funds, but also to prevent the unexpected loss of client funds for reasons beyond the attorney’s control.
Commingling can also be an issue in community property states, which view certain assets acquired during a marriage as being jointly owned by both spouses. If a spouse mixes their separate property with marital property, such as in a joint bank account, and there is later a divorce, then the spouse risks forfeiting some of the separate property when the marital property is divided. California law, for example, presumes that property acquired during a marriage is community property, and must be rebutted by evidence to the contrary.
[Last updated in June of 2021 by the Wex Definitions Team]
