Also known as: trace out · traces out · traced out · tracing
Written by attorneys · grounded in primary & secondary sources — see below
A method of following the path of funds or property through commingled accounts to determine their original character or source. The process applies equitable principles or other permitted tracing methods when proceeds or assets have been mixed with other property. Identification succeeds to the extent the method distinguishes the relevant portion under applicable non-article law.
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Tiana Tan holds a perfected security interest in a debtor's inventory. The debtor sells the inventory and deposits the cash proceeds into a bank account already containing unrelated funds. Tiana applies an equitable tracing method allowed under state law to identify the exact amount of her collateral in the account. The court treats the traced sum as identifiable proceeds subject to her continuing security interest.
Thaddeus Tran receives an inheritance during marriage and deposits it into a joint investment account. He later withdraws a portion to purchase a vehicle titled in his name alone. In the divorce, he produces bank statements showing the deposit and subsequent withdrawal. The court accepts the tracing and classifies the vehicle as his separate property.
Tori Taylor deposits a personal injury settlement check into a marital savings account that already holds community funds. She immediately transfers an equal sum into a new brokerage account opened solely in her name. At divorce she supplies deposit slips and transfer records linking the brokerage balance to the settlement. The court recognizes the traced amount as her separate property.
Tyler Taylor's business account receives payments from collateral subject to a security interest and later receives unrelated deposits. The secured party reconstructs the account history using the lowest intermediate balance method. The reconstruction shows that a portion of the original collateral proceeds remains in the account at all times. The court awards the secured party a perfected interest in that traced amount.
The secured party must show that the proceeds are identifiable by a method of tracing permitted under other law, including equitable principles. When the proceeds are not goods, the statute expressly authorizes use of such methods for commingled property. A perfected security interest in the original collateral remains perfected in the identified proceeds.
Supporting sources
Bank records, deposit slips, withdrawal receipts, and account statements that link the original separate asset to its current form are typically required. Mere commingling does not automatically transmute the property, but the spouse claiming separate character bears the burden of tracing. Courts reject claims when the records fail to isolate the separate portion from marital funds.
…for rape." Id. , at 593. In Ford v. Wainwright , 477 U. S. 399, 408 (1986), we held execution of the insane unconstitutional, tracing the roots of this prohibition to the common law and noting that "no State in the union permits the execution of the insane." In Enmund v. Florida , 458 U. S. 782, 792 (1982), we…
…grounds by Aetna Life Ins. Co. v. Wadsworth , 102 Wn.2d 652, 689 P.2d 46 (1984). If there is any confusion or uncertainty in tracing
…of a promise to marry (Civ. Code, § 43.5, subd. (d); Askew v. Askew (1994) 22 Cal.App.4th 942, 954-957 [28 Cal.Rptr.2d 284] [tracing
…cohabitation situation." Community Property Deskbook § 2.7, at 2-8. The most common means of avoidance include: (1) tracing
…in Whiting, supra , we discussed equitable distribution under the W. Va. Code , 48-2-1, et seq. [1990] and rejected the tracing approach requested by Mrs. Wood. See Syllabus Point 6, Whiting . In Syllabus Point 1, Whiting , we stated: Equitable distribution under W. Va. Code, 48-2-1, et seq. , is a…
Supporting sources
Yes, the rule is one recognized equitable tracing method that courts may apply to commingled accounts. It treats withdrawals as coming first from non-collateral funds and preserves the security interest in any remaining balance traceable to the original collateral. The method is available when state law permits its use for commingled property.
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The security interest or separate-property claim is lost to the extent the funds cannot be identified. Unidentified amounts are treated as untraceable and may be subject to the claims of other creditors or characterized as marital property. The burden remains on the party asserting the interest to complete the tracing.
Supporting sources