Tracing Rules to Identify Separate Property
There are six principal rules for tracing and clearly identifying separate property.
The clearinghouse method of tracing or the identical sum inference.The clearinghouse method of tracing refers to the tracing of specific deposits and specific withdrawals in a particular account so as to characterize the balance in the account, to characterize assets that were purchased with withdrawals from the account, or to characterize the withdrawals and expenditures for reimbursement purposes. See e.g., Estate of Hanau v. Hanau, 730 S.W.2d 664, 667 (Tex. 1987); Peterson v. Peterson, 595 S.W.2d 889, 892 (Tex. Civ. App. - Austin 1980, writ dism'd w.o.j.); see also, Latham v. Allison, 560 S.W.2d 481 (Tex. Civ. App. - Fort Worth 1978, writ ref'd n.r.e.) (unsuccessful tracing). The identical sum inference method is a somewhat refined application of the clearinghouse method in that the focus of the identical sum inference method is on a particular deposit and its identical withdrawal. See e.g., McKinley v. McKinley, 496 S.W.2d 540 (Tex. 1973).
The community out first rule.When separate property and community property are commingled in a single bank account, it is presumed that the community funds are drawn out first, before separate funds are withdrawn, and where there are sufficient funds at all times to cover the separate property balance in the account at the time of the divorce, it is presumed that the balance remains separate property. See e.g., Smith v. Smith, 22 S.W.3d 140, 146 (Tex. App. - Houston [14th Dist.] 2000 no pet.); Welder v. Welder, 794 S.W.2d 420, 434 (Tex. App. -- Corpus Christi 1990, no writ).
Item tracing.The party asserting separate property ownership must clearly trace the original separate property into the particular assets on hand during the marriage. See e.g., Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975); Mortenson v. Trammell, 604 S.W.2d 269, 274 (Tex. App. - Corpus Christi 1980, writ ref'd n.r.e.).
The minimum sum balance method.The party establishes that the monies deposited into the bank account were separate property and the account balance never fell below that set amount. See e.g., Padon v. Padon, 670 S.W.2d 354, 357 (Tex. App. - San Antonio 1984, no writ); Snider v. Snider, 613 S.W.2d 8, 11 (Tex. App. - Dallas 1981, no writ).
Pro-rata approach.A portion of an account is proved to be separate property, remainder community property. See e.g., Marineau v. General Am. Life Ins. Co., 898 S.W.2d 397, 403 (Tex. App. - Fort Worth 1995, writ denied).
Value tracing.Method commonly accepted as the means by which cash assets are traced. Under the law, there can be no commingling by the mixing of dollars where the number owned by each claimant is known. See e.g., Trawick v. Trawick, 671 S.W.2d 105, 110 (Tex. App. - El Paso 1984, no writ); Mortenson, 604 S.W.2d at 274.
Exceptions to the Rules.Although tracing the commingling of funds is generally a somewhat complicated endeavor, a review of the above cases reveals a willingness on the part of courts to overlook gaps in tracing and forgive instances of commingling under one or more of the following circumstances:
(1) Marriage of Short duration. The marriage was of brief (less than five years) duration. See e.g., Depuy v. DePuy, 483 S.W.2d 883, 887 (Tex. Civ. App.--Corpus Christi 1972, no writ); Barrington v. Barrington, 290 S.W.2d 297, 298 (Tex. Civ. App.--Texarkana 1956, no writ) (one year marriage); Farrow v. Farrow, 238 S.W.2d 255, 256 (Tex. Civ. App.--Austin 1951, no writ) (parties divorcing for the third time, most recent marriage had lasted approximately five years).
(2) Marriage Non-tradtional. The marriage was not a traditional, child-producing, first marriage for the couple but rather a "December" marriage or a second or subsequent marriage for the individuals. See e.g., Peterson v. Peterson, 595 S.W.2d at 890 (parties in their fifties when they married); Harris v. Ventura, 582 S.W.2d 853, 854 (Tex. Civ. App.--Beaumont 1979, no writ) (second marriage at least for deceased husband); Lindsey v. Lindsey, 564 S.W.2d 143, 146 (Tex. Civ. App.--Austin 1978, no writ) (Mrs. Lindsey allowed reimbursement for $60,000 that she had acquired from her former husband); Farrow, 238 S.W.2d at 256 (third marriage for parties); Coggin v. Coggin, 204 S.W.2d 47, 49 (Tex. Civ. App.--Amarillo 1947, no writ) (second marriage).
(3) Expenditures Made Early in the Marriage. The major expenditures or deposits sought to be traced were made very early in the marriage, when it would have been appropriate for the couple to still think of property as "his" and "hers." Peterson, 595 S.W.2d at 890, 892-93 (Husband allowed to trace $35,000 inheritance into $32,973 check written 28 days after couple married; Mr. Peterson wanted the house to be his separate property, but on day of closing, Mrs. Peterson said she would not sleep under the roof unless her name appeared on the deed); Depuy, 483 S.W.2d at 887 (Husband's deposited $66,647 inheritance from grandfather into commingled account 48 days after couple married).
(4) Other Spouse had Control of the Funds. Party asserting separate property status was not the party responsible for the commingling of funds. See e.g., Sibley v. Sibley, 286 S.W.2d 657, 659 (Tex. Civ. App.--Dallas 1955, writ dism'd), (Wife would not be forced to forfeit her substantial separate estate when it was husband, the manager of the couple's affairs throughout their 25 year marriage, who caused the funds to be commingled).