Protect Your Joint Bank Account During a Divorce

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  • Arons and Solomon
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  • February 26, 2019

Protect Your Joint Bank Account During a Divorce

Divorce takes many people by surprise. For some couples, the decision to divorce feels like it was a long time coming. For others, the words “I want a divorce” seemingly come out of left field.

Whichever category you fall into, it’s important to act quickly – and thoughtfully – to safeguard your money. The decisions you make in the early stages of separation and divorce can have a direct impact on your final settlement, for better or worse.

Every divorce addresses the issue of dividing marital assets and debts. This will include your shared bank accounts, which will eventually be liquidated and closed. However, there is typically a window of time between spouses having the “divorce talk,” and filing the Complaint for Divorce when these accounts remain open and functioning as they always have.

Here is where things can get messy. In a perfect world, both spouses would sit down together, open separate bank accounts, divide the money equally, close the shared account, and figure out a plan to pay all shared household bills during the divorce proceedings.

We realize divorce is rarely a perfect world. Even if you are expecting a low-conflict divorce, you need to take the steps necessary to protect yourself.

Every case is different. The best course of action will depend on the details of your specific situation. However, as a rule of thumb: Don’t touch the money in the account without consulting a divorce lawyer.

Yes, you can technically drain the entire joint bank account. Yes, you may be entitled to half the money in the joint bank account. But that doesn’t mean you should immediately withdraw that money. In fact, doing so could actively work against your best interests.

Reasons to NOT Empty Your Joint Bank Account

  • Your Spouse May Consider it an “Act of War”

Zeroing out a shared bank account is a very aggressive way to begin a divorce. It will likely set an adversarial tone for the rest of the divorce proceedings. When cash starts disappearing, things tend to escalate quickly in terms of hiding money, removing property from the home, withholding information, and overall breakdowns in communication and mutual respect. The more difficult your divorce dynamic, the more time and money it will take to reach a final agreement.

  • It Could Hurt Your Credit

If the joint bank account is used to pay household expenses, draining the account will leave insufficient funds to pay those bills. In the digital age, a lot of shared checking accounts have a recurring schedule of paychecks being direct-deposited and expenses being auto-billed to the account each month. If you mess with the equilibrium of the account and miss payments, it will ultimately hurt your credit.

  • You Will Probably Have to Pay it Back (and Then Some)

New Jersey is an equitable distribution state, which means the marital assets are not always split exactly down the middle. The court determines what constitutes a fair and reasonable distribution of property, which means it can take other factors into account, such as earning capacity. (N.J.S.A. 2A:34-23.1)

A judge could order you to repay a portion of the money you removed, with interest. If there are late fees and penalties from bills that encountered insufficient funds in the account, you could be on the hook to pay those too.

  • It Could Hurt Your Divorce Settlement

Judges do not like to see people “fighting dirty” in a divorce case. If you removed some funds to pay marital bills, that’s one thing. But if you emptied the account for no other reason than to pre-emptively hurt your spouse, it will reflect poorly on your credibility and character in the courtroom.

Trying to cheat your spouse out of shared assets will cost you, especially if you lie to the court about it. If you are caught hiding assets from the other party, a judge may:

  • Allocate more assets to your spouse than originally planned
  • Award the hidden assets to your spouse
  • Make you pay back the missing money through higher spousal support payments
  • Make you pay the bills of your spouse’s accountants, lawyers, and investigators hired to hunt down the missing money
  • Penalize you with expensive sanctions

How to Stop Your Spouse from Emptying a Joint Bank Account

If you are not the breadwinner, the money in your joint bank account might be the only resources you have to continue meeting your financial obligations and to obtain legal counsel during the divorce proceeding. If this is the case, the possibility of your spouse beating you to the punch and draining the entire account poses a very serious financial risk to you and your children.

If you are worried about your spouse emptying a shared bank account, you should contact the bank and request a freeze on the account as soon as possible. A frozen account would require authorization from both parties to make any deposit or withdrawal from the account.

The bank may freeze a joint account at your request, but they are not legally required to do so without a court order. A divorce lawyer can help you file an application seeking to freeze the account to prevent both parties from making any changes to financial accounts and documents without facing major legal repercussions.

Time is of the essence. It can be very difficult and expensive to resolve hidden asset cases, and almost impossible to do so if they involve money hidden overseas. For investments, contact your financial advisor or broker to let them know about the divorce, and to make sure no transactions occur moving forward without your consent in writing.

If you have a shared safety deposit box, you can remove your personal property or request a freeze on the box. It might be a good idea to take a time-stamped picture of the contents of the box for your records.

Don’t Forget About Shared Credit Cards

Shared credit cards must be handled on a case-by-case basis with the advice of legal counsel. Generally, you should not close (or freeze) an account if it is your spouse’s only card.

We’ve all heard the horror story of a person waking up one morning to discover his angry spouse maxed out the balances on all their shared credit cards. If you are worried about a similar scenario, you can request limit decreases to minimize the potential damage of a vengeful shopping spree.

What if the Bank Account is in My Name Only?

Unfortunately, you are still not in the clear. A bank account in one spouse’s name is typically considered a ‘marital asset’ unless it is funded exclusively by gift or inheritance.

If you do not already have one, you should open a separate bank account in your own name. Keep good records of what you are spending money on. Stick to household, living, and legal expenses. This is not the time for retail therapy!

Contact a New Jersey Divorce Lawyer

Your plan of action will depend entirely on the details of your case. You should consult a divorce lawyer as quickly as possible to protect your financial well-being, and get your divorce started on the right foot.

Contact us today for a free initial consultation.

 Request a free consultation »

The family lawyers at Arons & Solomon, P.A. hold decades of experience in all areas of New Jersey and New York divorce, from mediation to litigation. Contact us for a free consultation to organize the facts of your case and get the results you deserve.

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