Is Your Ex Entitled to Your Separate Bank Account After a Divorce?

By Wayne Thomas

Money can be a source of contention in divorce. While it is common for a couple to have a joint bank account, each spouse may also have one or more separate accounts. Knowing how the funds in these accounts are classified in divorce, and what steps you may take to add greater certainty to the process, will help you protect your property rights.

Money can be a source of contention in divorce. While it is common for a couple to have a joint bank account, each spouse may also have one or more separate accounts. Knowing how the funds in these accounts are classified in divorce, and what steps you may take to add greater certainty to the process, will help you protect your property rights.

Separate Property

Under the laws of most states, assets that are acquired by either spouse before the marriage, or those received as a direct gift or inheritance during the marriage, are deemed "separate property." Separate property typically does not go through the property division phase of divorce and instead remains with the spouse that acquired it. All other property is considered marital property and is subject to division. It is important to note that although bank accounts are often referred to as "separate" when only one spouse has his name on the account, this is generally not determinative of whether the funds in the account will be treated as marital or separate property in divorce.

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Commingling

If you have both separate and marital funds in your bank account, the court must be able to distinguish between the two. If you have made a series of deposits and withdrawals of both types of property over time and fail to make an adequate record, the court may not be able to trace the source of the funds. This is referred to as commingling, and the typical result is that all of the funds in your account will be considered marital property and subject to division during divorce proceedings.

Prenuptial Agreements

To give you greater control over your property, most states allow you and your spouse to enter into prenuptial agreements. These agreements are created before you marry and allow you the freedom to decide in advance how property is to be classified and divided upon divorce. For instance, you and your future spouse may decide that any funds deposited in accounts that you open in your name during the marriage remain your separate property at the time of divorce, regardless of the source of the funds.

Transmutation

You are also generally free to change the classification of property during marriage from separate to marital property or vice versa. This process is referred to as transmutation and requires the agreement of both spouses. Some states also require that the agreement be made in writing. Transmutation generally does not apply to commingled assets.

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Is an Individual Bank Account Considered Joint Property in a Divorce?

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Financial Gifts in a Divorce

In many cases, if you personally receive money as a gift, it will not be affected by a divorce. Generally, gifts made to one spouse are considered "separate property," meaning it belongs solely to the spouse who received it, even if received during the marriage. However, courts may consider the financial resources of each spouse, including separate property, when determining the terms of the divorce. While divorce laws and property division vary by state, courts may have discretion to divide separate property in a divorce depending on the circumstances.

Ending a Company During a Divorce

For small business owners, divorce may bring even more stress and worry because the spouse who owns the business may be concerned about what will happen to it during a divorce. Depending on the type of business and where the money came from to purchase it, the business may be considered an asset of the marriage; thus, a court may divide the value of that business between spouses when they divorce. However, each state has its own laws addressing business assets during a divorce.

Protecting Your Inheritance From Your Second Wife

A bitter divorce can leave you skeptical regarding financial matters heading into a second marriage. If you have, or intend to receive, a substantial inheritance, most states allow you to keep it, if you divorce. Exceptions to this general rule exist, however, and knowing how to separate your assets will help shield your inheritance from claims by your second wife.

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