You’re a couple who are professionals or in business. You kept a bank account separate and under each other’s name. Are those bank accounts part of your marital estate? Are separate bank accounts considered marital property?
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Married people wonder if their bank accounts they have kept separate are considered marital assets.
Here’s the scenario: you’ve been married for eight years.
Both couples work. He works, and she works. Each keeps their money in separate accounts in their respective names. Each to their own. This is what is meant by the term separate bank account. Separate to each of you. Not a joint account. If you get a divorce, is that money part of the marital estate or is it separate?
The answer is, it’s part of the marital estate.
It doesn’t matter whose name the account is. it matters when it was accumulated. Even if it’s in your own name. If you accumulated it during the marriage, it’s a marital asset when it comes time for divorce.
What Does Marital Asset Mean?
In a nutshell, marital property is the collection of assets that a couple has amassed over the duration of their marriage. This can include a range of possessions like a house, a car, particular joint bank accounts, family antiques, and more. These assets, as opposed to those acquired previous to marriage, can be divided between the partners in a divorce.
Any asset or debt accumulated during the course of the marriage, from the wedding day until the divorce decree is issued. The parties will decide how to divide the marital estate.
The purchase of a home is common during a marriage. In accordance with the house’s status as marital property, it would be divided. Occasionally, divorcing couples decide to sell their home and divide the proceeds. Another option is for one spouse to keep the house while the other receives other assets, including money in joint bank accounts, in order to maintain an equal property division.
The majority of states view funds held in separate bank accounts as marital property, or things obtained during a marriage. Community property rules are in place in about 10 states, which means that both spouses are entitled to any assets — including cash, vehicles, homes, and other possessions — amassed throughout the marriage. But in the rest of the nation, anything gained by a spouse during the marriage remains that spouse’s property because equitable distribution statutes are followed.
Even while equitable distribution rules may appear straightforward, it can become challenging if the divorce is litigated in court. Attorneys should be able to make the case that this property should be treated as “marital property” and that the spouses should divide it equally.
The only way to prevent this is if the couple signed a prenuptial agreement outlining the ownership of any assets obtained by a spouse during the marriage.
Are Separate Bank Accounts Separate Property?
In the hopes that they will retain ownership of their assets, several people have kept their funds apart from their spouses throughout their marriage. Contrary to popular belief, however, just because someone’s name appears on a bank account does not imply that all the money in it is theirs alone. You are not guaranteed to get all or any of the money in the account, even if your name is on it and your spouse’s money has never touched it.
Separate bank accounts may be regarded as separate property under the following circumstances, but there may be exceptions that can be argued in court:
[ a] The bank account did not receive any funds during the marriage. Any income received during the marriage that is deposited into this account is regarded as commingled income.
[ b ] No money from the other spouse’s income was ever deposited, and their name was never added to the account.
[ c ] No monetary gifts in the names of both spouses were deposited in the account. Any inheritance or gifts must only be in the account holder’s name; otherwise, the funds are deemed to have been commingled.
Having a separate account in your own name is only advantageous if it was already established before the marriage and you don’t intend to add any more money to it or use it to make purchases.
If you have a separate bank account when you get married, it will only be treated as separate property and not marital property if neither you nor your spouse uses it during the marriage. A judge will deem the account to be commingled and will therefore designate the account as community property if you want to put money into the account or utilize the money for something like paying bills.
How Does Commingling Affect Separate Bank Accounts?
To combine funds or properties into a common fund or stock is referred to as commingling. When separate and community property are combined, the major problem of property commingling arises. The separate property will thereafter be divided equally between the divorcing parties as community property.
Commingling can take place in a number of ways. When you add your spouse’s name to a bank account, one typical occurrence takes place.
[ a ] You opened a $75,000 bank account in the name of your husband, and the two of you use it to deposit checks and pay bills. The initial sum has been mixed with other funds. The $75,000 would presumably be viewed as community property by a family court judge.
[ b ] Commingling can also happen if your spouse’s name isn’t put in the bank account but you both use it to deposit cheques and pay bills. If your divorce lawyer presented a strong case, the court might view the initial sum as separate property. Your case may be strengthened by thorough records. If the marriage has lasted for a substantial amount of time, this might be valuable.
Keeping it in your own name does accomplish one thing. It doesn’t allow your spouse to invade your account and take your money. That’s very important. There have been a lot of situations where money is in both names. A day before the divorce the spouse comes in and clears out all of the accounts. It happens.
So keeping it in your own name protects you from that. The money in that account is still subject to division in a divorce.
So money in your spouse’s name or in an account in your name alone is still subject to division. It belongs half to you and half to your spouse. Similarly, when your name in your account specifies you and only you, the proceeds to that account accumulating during the marriage are half to you and half to your spouse.
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