Classifying the Account
When a couple cannot agree on how to divide bank account funds, the first step a court will typically take is to classify the property as either marital or separate. Money in the account that was acquired during the marriage, such as through wages, is generally considered marital property and is subject to division as part of divorce. If the money was acquired before the marriage, or was received as part of an inheritance or gift to one spouse, it is typically considered separate property and remains with the spouse that acquired it.
Dividing the Funds
If the court classifies your bank account funds as marital property, the money will be divided according to state law. Some states take the position that both spouses are co-owners in all marital property and require judges to try to divide the assets as evenly as possible. Other states look at the needs of the parties as well as contributions made during the marriage to arrive at an equitable and fair division. In both scenarios, courts often use cash in accounts to offset awards of large assets that are not easily capable of division, such as a house.
Sometimes, the way the spouses treat assets in a bank account can cause separate property to become subject to division. One way is by commingling. Commingling occurs when separate property is mixed with marital property to the point that its source cannot be traced. For instance, suppose you were given a $25,000 direct gift from your father that you then deposited into a joint checking account shared with your spouse. Then, during your marriage, suppose you and your spouse regularly made deposits and withdrawals from that joint account. When you divorce, the court might have trouble differentiating between the gift and other funds. If the court cannot properly trace the source of the bank account balance, it might treat the separate gift as marital property.
The classification of money held in a bank account may also change through a spouse's intentional act. This is referred to as transmutation, and might apply if you had a bank account prior to the marriage but then added your spouse as an owner during the marriage and gave her unlimited access to the funds. Here, a court could conclude that you intended to convert your separate property into marital property. However, some states have addressed this issue by requiring that you clearly consent to the reclassification in writing for it to be valid.