One of the most common problems people experience after they file for divorce is lacking sufficient funds to pay their bills. From the moment one party decides to end their marriage to the point at which a judge signs off on its dissolution, money can be difficult to come by. That’s particularly true in cases where only one spouse works. The other spouse may lose access to their shared bank accounts, leaving him or her in dire financial straits.
A common temptation among divorcing spouses is to withdraw half of the cash held in their joint accounts – checking and savings – once they decide to get divorced. On the surface, this seems like a perfectly reasonable action to take. But things are often more complicated than what appears to be the case on the surface.
This article will discuss some of the merits and risks of taking money from jointly-held bank accounts during the divorce process. If you have specific questions regarding this issue, it is highly recommended that you consult an experienced divorce attorney about your circumstances.
Place A Hold On Joint Bank Accounts
When both parties fear that the other person may drain their joint accounts, it’s a good idea to file an Automatic Temporary Restraining Order (ATRO). The order takes effect when one spouse serves the divorce petition on the other spouse. It prevents both parties from acting on their shared assets until their dissolution of marriage has been finalized by the courts.
For example, neither party can legally remove money from the couple’s joint checking or savings accounts; they cannot withdraw the money or transfer it into accounts held solely in either name. Moreover, neither party is able to close the accounts.
The ATRO extends to other actions that affect jointly-held assets. For instance, neither party is allowed to borrow money against the marital home. Neither one can change the beneficiaries on their respective life insurance policies.
Filing an ATRO is the most effective way to “lock down” a joint bank account and prevent it from being drained by either spouse. Having said that, doing so may be unnecessary if you and your spouse get along and are committed to filing an uncontested divorce.
Joint Accounts: Aren’t You Entitled To Half The Cash?
Many people seeking a divorce assume they are entitled to half of the funds held in their joint accounts. As such, they believe they have a right to withdraw them at any time, including after a divorce petition has been filed. The problem is, they may not have that right. And even when there is a legal right to withdraw the funds, it may be a bad idea to do so.
First, it’s important to note that some states automatically prohibit such withdrawals from the moment the petition is filed. Both parties are essentially locked out of their joint accounts. It may be possible for them to drain the accounts, but doing so could have legal consequences.
Second, taking half of the money held in a joint account when there isn’t a justifiable reason to do so can place the individual in a poor light. The action may seem vindictive or underhanded, which can complicate the couple’s settlement negotiations.
If one party can demonstrate that he or she needs the money in the couple’s joint account in order to survive, the divorce proceedings are likely to progress more smoothly. However, draining an account without being able to show such a need can cause serious problems later.
Protect Yourself Or Play Nice And Hope For The Best?
The takeaway is that every divorce case is unique. Each one is affected by the unique circumstances that surround it. Some individuals should do everything in their power to protect themselves financially. For them, there is a high likelihood that their spouses will drain their accounts, leaving them with little money to pay their living expenses. Others will be better served by talking openly with their spouses regarding how their assets should be divided. For them, an uncontested divorce, one in which both parties remain amicable and agreeable, is a viable option.
Contact a family law attorney who has years of experience helping clients end their marriages while protecting their rights. Whether or not you expect your case to progress smoothly, your attorney’s advice can help you to obtain what you need while avoiding legal trouble.