When a couple begins the divorce process, one person usually wants to control the flow of money. However, once the process begins, the court and the law intervene and impose a certain status quo on what each party can do with marital property or even separate property that has not yet been deemed separate property. The general status quo is rather simple: no one party can dispose of any property without the consent of the other party.
One part of this status quo that some people during a divorce do not like is the impact it has on joint accounts. During the marriage, both spouses opened joint accounts – checking accounts, savings accounts, investment accounts. The normal terms of the agreement for a joint account are that either party may make withdrawals (some investment accounts have two signature requirements). Once a divorce begins, a spouse may worry that the other spouse will drain the account balances and essentially abscond with the funds. What can this spouse do to protect himself or herself?
First, each spouse should understand that depleting marital funds after the filing of divorce will come back to haunt that spouse. Once the withdrawal is discovered, those funds will be allocated as marital property in a final dissolution judgment. So, if a spouse takes $100,000 of marital funds, the court will note that the spouse only had a right to half that amount, or $50,000. Therefore, that spouse owes the other spouse the other $50,000. That equity balancing may also require payment of attorney fees or other consequences of draining an account. Additionally, the court can consider this behavior marital misconduct and make an inequitable distribution of property in favor of the other spouse.
Second, in many counties in Missouri local rules prohibit taking any unilateral actions with regard to bank accounts or investment accounts. Indeed, in St. Louis County, for example, if a spouse takes funds from a joint account without the consent of the other spouse, the court could find that spouse in contempt, order the funds returned and order that spouse pay attorney fees as well.
Third, despite these caveats, a spouse can take measures of protection. It is unlikely that in Missouri a spouse would be able to put a freeze on an account because that is a unilateral action that could hurt the other spouse, just like draining the account (even though it does not change the status quo). But a spouse can do the next best thing – provide a notarized letter that no withdrawal from the account may be made without the written consent of both account holders. Essentially, the spouse is telling the bank that the parties have begun a divorce and because of that change, you want jointly written approval for any withdrawal. Because of the fear of liability, banks usually grant this request.
Finally, after a divorce has begun, spouses can still agree to separate accounts. Each spouse can propose how they want to divide a certain account and assign a marital property value to each amount received, by each spouse. If this arrangement is approved by the court the property transfer may occur. In this way, a spouse may have more of a sense of relief that a particular valued account will not be drained in any way.
If you have questions about handling joint accounts during divorce, contact us – we can help.