There are two primary types of joint accounts: bank accounts and credit card accounts. Learning how they function and the best way to approach them during a divorce is critical! How you interact with these accounts during a divorce depends heavily on your circumstances, but we want to share some key facts about joint accounts and important ways you can be proactive with them during your divorce.
Pursuit of Your Best Self Tip #13: Learn how joint accounts work.
Joint bank accounts are owned by two or more people. Each party has the right to make decisions on this account, and they can deposit into or withdraw money from it. Technically, either of the parties can take out the entire amount of money in the account and close it. You’re not advised to do this. Remember this is marital property and will need to be considered in the divorce negotiations. As I mentioned previously, it’s best to keep things as-is or maintain the status quo until the divorce is final.
What Not to Do with Your Joint Bank Account
You cannot take your spouse’s name off the joint account without his or her permission. Even if you’ve banked with the same bank for years, they are not allowed to help you cut your spouse off from an asset that is legally theirs. If you are amicable with your soon-to-be ex-spouse, you can discuss closing the joint account and splitting the money.
You can also speak with a divorce attorney and ask if it is legal in your state to withdraw half the contents of the account. This may only be allowed if divorce proceedings have not begun. Details like this are why it’s important to consult with an attorney!
Last but not least, if you are concerned that your soon-to-be ex-spouse may withdraw all the money, then you should contact the bank and let them know you are going through a divorce. Ask them to freeze your account so that neither of you can carry out transactions on it. I would advise that you contact your attorney and discuss how and when you should inform your soon-to-be ex-spouse that you put a freeze on the account.
Joint Credit Card Accounts
The only way to close a joint credit card account is to pay off the balance and then both you and your spouse can agree to close it. The danger of leaving your joint card open after the divorce is that you run the risk of your ex-spouse making excessive charges and running up the balance. Regardless of whether or not you are divorced, you both are still jointly responsible for the balance. As far as the creditors are concerned, it doesn’t matter what the divorce decree says. In their eyes, you and your ex-spouse signed a joint contract, and you are both responsible for the debt.
Ways to be Proactive
Document every deposit and withdrawal from your joint bank account and save every receipt or documentation of charges on your joint credit card. Make sure to alert all creditors that you are going through a divorce because they may have some of their own procedures or protocols that need to be followed.
Remember…copy, copy, copy! Keep copies of all statements. This will be especially helpful if your soon-to-be-ex decides to run up your joint credit card balance or take excess funds out of your joint bank account.
Pursuing Your Best Self
In my book, Unforeseen Exit: When You Find Yourself Facing Divorce & Suddenly Single, I tell my story of navigating an unforeseen divorce. By openly telling my story, I want to provide guidance and support to those who have found themselves in similar circumstances, so they can pursue their best self personally and financially!
For more information on how I can support you as your financial planner, schedule a discovery meeting with me today!
