Joint Accounts During Divorce: When Can You Withdraw Funds?

Divorce, Money, Relationships

By Jessica Walters

One of the messiest parts of divorce is figuring out how to pay for things until your divorce settlement is finalized. Even affluent wives run into difficulties securing funds to pay for living expenses and legal counsel during divorce when their husbands control the money.

In many marriages one spouse controls the money. The other spouse may not have access to all accounts, let alone know where all the money is. Often this means one spouse may quickly clean out accounts before the other can know what’s happening.

Take the Money and Run?

Once you or your spouse files for divorce, withdrawals from joint accounts may be restricted during proceedings. So if you’re about to file for divorce (or if you think your spouse may be), now is probably the time to withdraw money to set aside for your own needs. But how much should you take?

The issue is complex; while you do legally have the right to half of all marital assets, you may not have access to some. So do you clean out the bank account, leaving your spouse the assets they have locked away?

In states like New York and California, such withdrawals can only be done before legal action has formally begun. After divorce proceedings have begun, money transfers are restricted automatically. Avvo legal analyst and Los Angeles divorce attorney Kelly Chang Rickert advises that you technically can — and probably should —  take whatever you need before filing papers. This way, you’ll avoid any restrictions placed on transactions by a restraining order during the divorce. “Technically, if it’s community [property],” Rickert says,  “then you can withdraw up to 50 percent… The problem is, the other spouse may have reimbursement claims, etc., and [when] there is a restraining order, you may run into problems if you have a vindictive ex.”

Should You Wait to Touch Joint Accounts?

Pulling money out of accounts as you begin your divorce could very well start your case off on the wrong foot (as if there’s a happy way to go about divorcing). Depending on your personalities and the circumstances of the divorce, you may be able to work out how to divide assets before beginning your split. Obviously, it depends. Don’t take more than 50 percent of marital funds, and maybe not even that much.  Take enough to pay legal fees and bills until a temporary court order can be secured.

If possible, a better approach might involve attempting to talk with your spouse before withdrawing from a joint account. Philadelphia divorce attorney and Avvo legal analyst Jennifer A. Brandt agrees. “I typically advise clients to speak with their spouse about closing the account and equally dividing the monies. If that is not possible and they cannot communicate with their spouse, they should take no more than 50 percent of the money.”

But what if your spouse is wealthy, and you have no access to many of their accounts? Wouldn’t that entitle you to withdrawing more than half the joint account balance? Brandt says to still avoid taking more than 50 percent of joint funds, because this “usually leads to a money grab on [the spouse’s] part which, in the long run, can make the divorce even more complex.” Brandt suggests you talk to a judge about your situation. “If a client needs additional monies to fund the litigation, I would advise that she petition the court and get them by way of court order.”

Nice Guys Finish Last

Removing any money before speaking with your spouse is likely to seem threatening and could provoke them to liquidate all accounts in a jiffy. Communicate with your spouse and, if necessary, ask a judge to allow freedom and access to certain accounts throughout the pending litigation so that your spouse doesn’t have the upper hand in controlling all of the finances.

Although playing nice can often help your divorce, nice guys often finish last when others still refuse to fight fair. Be the one to Think Financially, Not Emotionally®, but prepare for any emotional reaction you spouse might display. Always consult your attorney before deciding how to handle joint finances as you begin your divorce–especially since divorce laws vary greatly from state to state.For even more information on managing your finances during divorce, check out a new book by Jeff Landers: Divorce: Think Financially, Not Emotionally – What Women Need to Know About Securing Their Financial Future Before, During, and After Divorce.

*Think Financially, Not Emotionally® is a registered trademark of Bedrock Divorce Advisors™, LLC.