Most divorcing couples that I have encountered have either separate or joint bank accounts. My husband and I use a joint bank account for bills and savings, but use separate accounts for our IRA’s. However, divorce attorneys always worry when they encounter couples who have only separate bank accounts. Eventually, they will ask if these assets are solely theirs. When they do ask, I have to break the bad news.
Who Owns the Money?
Couples who established bank accounts after the marriage began must divide these accounts equally when seeking divorce. Specific accounts that contain marital funds are the marital property of both parties. The name on the account is not important when it comes to deciding who “owns” the account for divorce purposes.
Divorce lawyers and courts look at bank accounts in two ways: community property and separate property. Couples split community property (like money in a bank account) equally. Meanwhile, couples who each own separate property keep their specific accounts or property. Judges will award separate property to the person judged to be the sole owner of that separate property.
What is Community Money?
Divorce courts use the word “community” to describe assets owned by both spouses in a marriage. If you purchase a vehicle while married, is is considered a “community vehicle.” If you used your credit and the vehicle is titled in your name, it is still considered community property.
This also relates to any purchased property, the furniture inside the properties, any money placed in bank accounts opened after the marriage began, and acquired stocks. During a divorce, community property is equally divided unless there are claims of marital waste. Any debts incurred during the marriage becomes community property of the couple and will need to be divided. Hiring a divorce attorney will be of significant value when going through this process.
The court may label your assets as “separate” if one spouse came into the marriage with previously owned property, or they are gifted property after the marriage began. For example: You came into the marriage with a bank account worth $50,000. During the marriage, you never added your spouse’s name to the bank account. This specific bank account would likely be declared separate property and not subject to being divided equally in a divorce.
When is Separate Not Separate?
Commingling is defined as ‘to combine funds or properties into a common fund or stock’. The main issue of property commingling occurs when separate and community property are mixed. The separate property is then considered to be community property and will be split equally between the divorcing parties.
Commingling can happen in several different ways. One common scenario occurs when you add your spouse’s name to a bank account.
- You added you spouse’s name to your bank account worth $50,000, and you and your spouse both use the account to deposit paychecks and pay bills. The original amount has been commingled. A family court judge would probably consider the $50,000 as community property.
- If your spouse’s name is not added to the bank account, but you both use the account to deposit paychecks and pay bills, commingling can also occur. The court could consider the original amount as separate property if your divorce attorney made a compelling argument. Detailed records can strengthen your argument. This could prove useful if the marriage has lasted for a significant time.
For a more detailed description of what is considered “separate” and “community” property, please review our article written by one of our skilled divorce lawyers: Division of Property and Debt.
How to Keep a Bank Account Separate?
There are ways to keep a bank account completely separate in the eyes of the court:
- The account should have only your name on it, not your spouse’s.
- The account should not receive deposits of community property. Money earned during the marriage cannot go into the separate account.
- Any inheritance money or gifts made to you can go into a separate account. If the gift has both spouses’ names on it (such as a wedding gift check), it can’t go into the separate account without commingling the funds.
Remember to keep detailed financial records from all bank accounts before, during, and after your wedding. These records can be helpful should you need to file for divorce. Many divorce attorneys will use these records if you want to prove that your accounts should remain separate.
Have your bank accounts become commingled? Call Right Divorce Lawyers at (702) 914-0400 to speak to one of our divorce lawyers about your case.
FAQs
Unfortunately, separate bank accounts are not protected from property division if the assets deposited were acquired during the marriage. Although the funds were not commingled, since they were deposited during the marriage, they will be deemed as marital property, which will be subject to equitable distribution.
How do I protect my bank account during divorce? ›
How to Keep a Bank Account Separate?
- The account should have only your name on it, not your spouse's.
- The account should not receive deposits of community property. Money earned during the marriage cannot go into the separate account.
- Any inheritance money or gifts made to you can go into a separate account.
To sum up, you can clean up the bank account before divorce: If it says so in the prenuptial agreement. If there is no prenuptial agreement or if the agreement is silent on the issue, you can still withdraw the funds so long the bank account is classified as your “separate property.”
Can my wife take half my bank account? ›
Unless you have a prenuptial or postnuptial agreement that specifies otherwise, anything earned while you were married but prior to separation, and anything you bought with that money, is considered community property—belonging equally to both spouses.
Can a spouse hide bank accounts in a divorce? ›
Under California law, a marital relationship is a confidential relationship requiring the highest good faith and fair dealing. Accordingly, California law provides that all spouses have a duty to make a full disclosure of all their assets and provide equal access to all information related to their finances at divorce.
Can I remove myself from a joint bank account during a divorce? ›
State law or the terms of the account often mean you cannot remove someone else from a joint bank account without their consent. But you should be able to remove yourself unless the bank specifically prohibits it.
Should I spend all my money before a divorce? ›
Because you want to avoid an allegation of dissipation of marital assets, you should put off large purchases until your divorce is finalized. Alternatively, if making a large purchase is unavoidable, such as a new car, you must be careful not to use shared assets to make the purchase.
Can a spouse take all money out of a joint account? ›
Similarly, even if the account is community property, a spouse may be able to withdraw money for reasonable living expenses, legal fees, and children's expenses. However, if one spouse empties the marital property joint bank account without sound justification, they could face repercussions.
How do I secure my finances before divorce? ›
How Do I Protect Myself Financially From My Spouse During a...
- Create a Financial Plan for Your Divorce. ...
- Open Your Own Bank Account. ...
- Separate Your Debt. ...
- Monitor Your Credit Score. ...
- Take an Inventory of Your Assets. ...
- Review Your Retirement Accounts. ...
- Consider Mediation Before Litigation. ...
- Popular Family Law Articles.
Until the divorce is officially finalized, both spouses may still have shared financial obligations, but temporary agreements or court orders may determine the specific financial arrangements.
It's possible to transfer money before a divorce, but it is a delicate process which you should not attempt on your own. If there's a chance your spouse will empty your joint bank account, you may want to consider transferring some of the funds to a separate account.
Are assets frozen during a divorce? ›
The court has the power to freeze your bank accounts and other marital assets when you're in the middle of a divorce. We're not just talking about the house, cars, and furniture. Marital assets can include insurance policies, bank accounts, inheritances, and more.
Is it a good idea for spouses to have separate bank accounts? ›
A joint bank account could be vulnerable to your spouse's creditors, while leaving your precious dollars in an individual account can protect them.
Do I have to give my wife money if we are separated? ›
Short- or long-term spousal support, also called separation maintenance (or alimony in a divorce) may be required if one partner is financially reliant on the other. You may also be entitled to spousal support if your marriage lasted a certain period of time, or because of a variety of other factors.
How to split finances in a divorce? ›
Close any joint credit lines. You'll also need to divide the assets you have in investment and retirement accounts. If you own a home with your spouse, decide who keeps it, or sell it and split any proceeds. If the home has a mortgage and you want to keep it in your name only, you'll need to refinance the loan.
