WorkflowFamily Law

Separate Property Tracing

Separate property tracing that follows a spouse’s inherited or premarital money through a joint account, day by day, into what it bought, with each figure on its statement page.

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Follow the inheritance into the lake house ↓

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The problem

Years of paychecks and card bills bury an inheritance in a joint account

The client inherited the money, and the estate’s check proves it. Then it went into the joint checking account and sat beside years of payroll deposits, mortgage payments and card bills. To keep it, the attorney has to show by clear and convincing evidence how much of it was still there, and where it went.

Proving that means reading each statement, rebuilding the daily balance and applying the state’s tracing rule one line at a time. One missing month breaks the proof, because nobody can say what the balance did that month. One wrong line in a spreadsheet moves the floor, and opposing counsel’s expert finds it on cross.

A forensic tracing audit takes months and runs to five figures, so on a mid-size estate the fee can outgrow the claim. Firms let go of inheritances they could have proved.

Built forFamily law attorneysForensic accountantsParalegalsManaging partners

The Problem Today

Inherited money put into a joint account is presumed community until someone proves how much of it survived.

672,502: divorces in 2023 in the 45 reporting states published
3–6 mo: and $10,000 to $25,000+ for one tracing audit published

Traced by hand today

Statements
Balances
State rule
Closings

One missing monthA gap in the statements breaks the low-balance proof
Claims concededOn mid-size estates the audit outweighs the claim

The Solution

Each statement readEach deposit sorted by its source; separate only with a document
The floor under the balanceThe separate claim drops each time the balance falls below it
Methods side by sideThe state’s rule beside the others a court may hear
Expert signs, lawyer approvesThe surviving dollars followed into the house; the exhibit approved

Built-in controls

Nothing is filed or served by an agent
Whoever signs the schedule cannot approve it
Each figure opens its statement page

What You Get

Firms prove claims they used to concede, with a picture a judge can follow and an expert can defend.

< $4,000: of expert time on one trace: 11.5 hours at $325 our estimate

The house share, in percentSeparate dollars followed into the down payment and price
Cross-examination preparedThe other side’s method computed and answered in advance
Ready before designationReport, schedule and outline done before the expert deadline

Statements to exhibits

Separate property tracing, statement by statement, down to the lake house

The features follow the trace in order, from reading statements to the trial outline, each with the role that leans on it.

01Accounts and statements
Statement coverage month by month, with each missing month flagged
How it works
- 313 statements on four accounts, with checks, wires, settlement statements and deeds
- Each account laid out month by month, each square read or missing
- A missing month on the joint account stops the trace until the statement arrives
- The missing month came from the bank with its records affidavit
Senior paralegalKnows which month is missing before anyone computes a balance, and has the bank’s affidavit in the file before the other side asks for it.
02Deposits by source
Each credit sorted by source, separate only with a proving document
How it works
- 249 credits after the inheritance: 248 community and 1 not proved
- The inheritance carries the executor’s letter, the check and the deposit line
- 214 payroll deposits from two employers stay community
- A $10,000 check with no donor letter waits for the attorney’s decision
Family law attorneySees at once which deposits can be claimed as separate, and which ones would only hand opposing counsel a point for cross.
03Balance curve
A daily balance curve with the separate claim drawn as a floor
How it works
- 1,894 daily balances from 1,280 transactions on 64 statements
- The floor starts at $150,000 and steps down only when the balance dips below it
- Four numbered drops, each cited to its statement page
- A panel beside the curve shows the claim at the cursor under each method
Family law attorneyHas one picture to put in front of the judge that shows where the inheritance went, in place of a spreadsheet that invites a long cross.
04The lowest balance
Each drop in the floor opened to the debits the bank printed
How it works
- At the lowest balance, the claim is capped at $41,300
- A tax payment of 38,600 and a transfer of 24,000 take the balance to 41,300
- Payroll deposits after the low do not raise the floor
- Each drop shows the separate money lost: 28,220, 25,030 and 55,450
Forensic accountantChecks each step of the floor against the page it came from before signing, without redoing the arithmetic in a spreadsheet.
05Tracing methods
The lowest-balance rule beside pro rata, direct tracing and separate first
How it works
- The same 1,894 daily balances recomputed under four methods
- Lowest balance, community out first: $41,300 into the lake house
- Pro rata gives $28,640; separate out first and direct tracing give $0
- Changing the method presented sends the schedule back to the expert to re-sign
Family law attorneyGoes to trial knowing what each method yields, including the one opposing counsel will argue, and why the state’s presumption gives the client more.
06What the money bought
A funds flow from each drop to its payee and into the house
How it works
- Each drop followed to its payee: the remodel, the truck, income tax and the business
- The wire matched to the title file, the settlement statement and the recorded deed
- The down payment split into 41,300 separate, 10,880 and 30,220 community
- Separate share of the $412,000 price: 10.0%
Family law attorneyKnows what share of the lake house is separate, and sees which spent dollars may support a claim for reimbursement.
07Tracing report
A tracing report and schedule with each figure cited to its page
How it works
- Opinion, method, schedule and the deposit not relied on, in numbered parts
- Checks before approval: 31 of 31 figures cited, no missing month
- Schedule totals tie: 28,220 + 25,030 + 55,450 + 41,300 = 150,000
- The expert signs, and the attorney, a different person, approves it as a trial exhibit
Forensic accountantSigns a schedule after 11.5 hours of review, where a manual tracing audit runs for months before anything reaches the attorney.
08Testimony outline
A direct-examination outline for the expert, each answer tied to an exhibit
How it works
- 14 exhibits listed, from the marriage license to the tracing report
- Six questions for direct, from the expert’s credentials to the opinion
- Answers drafted for cross on the other side’s method, the missing month and the unproven gift
- The attorney sends the outline to the expert from the same screen
Family law attorneyPrepares the expert for direct and cross from one screen before the designation deadline, with no separate binder of notes to keep in step.
09Audit trail
Who read, traced, signed and approved, with the time of each step
How it works
- Each statement read and each recompute logged with the agent that did it
- The expert’s review and signature, then the attorney’s approval
- The deposit left out, with who decided
- Kept 7 years after the final decree
Managing partnerCan show a court or a client who did each step of the trace, and that the person who signed was not the person who approved.

Four drops take the inheritance from $150,000 down to $41,300

The joint account’s separate floor, drop by drop, as the signed schedule carries it.

Drop	What took the balance down	Floor after	Separate money lost
1	Kitchen remodel at the marital home, three checks	$121,780	$28,220
2	Truck, one check	$96,750	$25,030
3	Income tax balance, then a transfer to the other spouse’s business	$41,300	$55,450
4	Wire to the title company for the lake house	$0	$41,300 into the down payment

Around the trace

Around the curve: an inheritance in a joint account, as the firm works it

New uploads, the gift decision, the other side’s curve, the closing, reimbursement and cross.

Statement run log: two new uploads read, 31 transactions cited, no missing month on the path, and the floor re-run with no change — **New uploads, same floor**Two new uploads read and 31 transactions cited. Coverage is re-checked and the floor re-run, and the lake house figure stays at $41,300.

Deposits screen after the decision: the $10,000 check marked left out, with the classifier’s note that the lowest balance caps the floor — **The unproven gift, left out**The attorney leaves the $10,000 check out of the claim. The lowest balance caps the floor at $41,300 either way, so leaving it out costs nothing.

Commingled funds tracing curve redrawn separate out first: the floor empties early, with a note that this is the argument the other side may make — **The other side’s argument, drawn**Switched to separate out first, the floor runs out early and $0 reaches the lake house. The curve marks it as the case opposing counsel may make.

Settlement statement opened from its citation: contract price 412,000.00, new loan 329,600.00 and the two wires that made the down payment — **The closing, at its page**The settlement statement opens from its citation: price $412,000, loan $329,600, and the two wires that made up the $82,400 down payment.

Reimbursement list for $108,700 of consumed separate money: remodel, income tax and business transfer awaiting the attorney, the truck with no claim — **Spent money, the attorney’s call**The remodel, the income tax and the business transfer are marked as candidates for a separate property reimbursement claim. The truck is consumed, with no claim proposed.

Cross-examination to expect: four questions on the method, the missing month, the unproven deposit and pro rata, each with its drafted answer — **Cross, answered in advance**Four questions the other side may put to the expert, from the inheritance spent first to pro rata, each with the answer the schedule supports.

A $10,000 gift left out because the lowest balance caps the claim anyway

What the agents found on this account, each settled before the expert signed.

A missing month that stayed above the floor

One month’s statement was not in the client’s papers. The bank’s copy, with its records affidavit, shows the lowest balance that month stayed above the floor of 96,750.

A gift that would change nothing

The client remembers a $10,000 check as her mother’s gift, but there is no donor letter. Proving it would raise the floor, yet the lowest balance still caps it at $41,300.

The first remodel check cost no separate money

The first payment of 14,000 left the balance above the claim. Only the second and third checks cut into the inheritance.

Dividends on premarital savings stay community

The premarital savings held $12,400 on the marriage date and never mixed with joint money. Its $2,560 of dividends is income from separate property, community under the state rule, and is not claimed.

Agents compute the floor; people choose the method, the claim and the signer

Five decisions on this trace that no agent makes.

Which method goes to trialThe comparer recommends the lowest-balance method. The attorney chooses, and a change sends the schedule back to the expert to re-sign.

Whether a deposit is separateA credit counts as separate only with a document that proves its source. Otherwise it is community unless the client produces proof.

What is pleaded for reimbursementConsumed separate money is listed as a candidate. The attorney decides whether to plead the remodel, the tax payment and the business transfer.

The expert’s signatureOnly the forensic accountant signs the schedule, after a personal review, and cannot also approve it as an exhibit.

Filing and servingNo agent files or serves anything. The attorney approves each exhibit, and the firm designates it with the expert’s disclosure.

Separate property tracing: the floor, a missing month and cross

What is separate property tracing?

Separate property tracing proves how much of a spouse’s premarital or inherited money survived in a mixed account, and what it bought. This solution reads each statement, draws the daily balance with the separate claim as a floor beneath it, applies the state’s tracing rule and drafts a cited schedule for the expert to sign.

What does the lowest intermediate balance rule do to the claim?

Community money is presumed to leave the account first. The separate claim falls only when the balance drops below it, and a later payroll deposit does not raise it. Only a proved separate deposit can lift the floor, and the screen shows each drop with its statement page.

What happens when a statement is missing?

The trace stops for that account. The paralegal requests the month from the bank, and when the bank’s copy arrives with its records affidavit, the floor is re-run. A missing month is not filled with an estimate.

Does it handle community property tracing outside the default rule?

Each matter is set to its state’s rule. Community out first with the lowest balance is the default, and other community property and equitable-distribution rules are available. The managing partner approves any change to the firm’s tracing rules.

Can it prepare the expert for cross-examination?

Yes. The claim is recomputed under the argument the other side is likely to make, and the outline drafts answers on the method, a missing statement and any unproven deposit, each tied to an exhibit.

Does it value the house the money went into?

No. It follows the wire to the title company’s file, the settlement statement and the recorded deed, and works out the separate share of the price. Any appraisal stays a separate exhibit.

Family Law

Put one inheritance on the curve
and see what reaches the house.

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Separate Property Tracing

Years of paychecks and card bills bury an inheritance in a joint account

The Problem Today

The Solution

What You Get

Separate property tracing, statement by statement, down to the lake house

Statement coverage month by month, with each missing month flagged

Each credit sorted by source, separate only with a proving document

A daily balance curve with the separate claim drawn as a floor

Each drop in the floor opened to the debits the bank printed

The lowest-balance rule beside pro rata, direct tracing and separate first

A funds flow from each drop to its payee and into the house

A tracing report and schedule with each figure cited to its page

A direct-examination outline for the expert, each answer tied to an exhibit

Who read, traced, signed and approved, with the time of each step