the act of mixing the funds belonging to one party with those of another party,
or, most importantly with funds held in trust for another. Spouses or business partners
may commingle without a problem, except that a spouse may thus risk turning separate
property into community property (transmutation), and a business partner may have
to account to the other. However, trustees, guardians or lawyers holding client
funds must be careful not to commingle those funds with their own, since commingling
is generally prohibited as a conflict of interest. Use of commingled funds for an
investment, even though it might benefit both the trustee and the beneficiary, is
still improper. Inadvertent commingling or temporary commingling (say, upon receipt
of a settlement check in which both the client and attorney have an interest) requires
prompt separation of funds and accounting to the client or beneficiary. To avoid
commingling, trustees, lawyers, guardians and those responsible for another's funds
set up trust accounts for funds of another.
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