Legal Definitions - commingle

To commingle means to mix or combine different funds, assets, or properties that should legally be kept separate, making it difficult to distinguish their original ownership or source. This often occurs when distinct categories of assets are blended into a single pool, potentially creating legal or financial complications.

Here are some examples:

• Business and Personal Finances: A freelance graphic designer, operating as a sole proprietor, deposits money from a personal inheritance into their business checking account, which also holds client payments and funds for business expenses.

  This illustrates commingling because personal funds (the inheritance) are mixed with business funds. This blending can make it challenging to accurately track income and expenses for tax purposes, determine the true financial health of the business, or separate personal liability from business liability.

• Client Trust Accounts: A property management company collects rent payments from several different tenants for various landlords and deposits all the money into a single bank account, rather than maintaining separate, dedicated accounts for each landlord's properties.

  In this scenario, funds belonging to multiple distinct entities (the landlords) are commingled into one account. This practice makes it difficult to track which specific funds belong to which landlord, can complicate financial reporting, and often violates contractual agreements or legal requirements for managing client funds separately.

• Physical Property: An individual inherits a unique collection of rare coins (considered separate, distinct assets) and then integrates them into a much larger, general coin collection they already own, without any system to identify or separate the inherited coins from the rest.

  This demonstrates commingling of physical property. The distinct, valuable inherited assets have been mixed and integrated with other property, potentially losing their individual identity and making it impossible to separate or trace their original components if, for example, the inherited collection had specific legal conditions attached to it.