If you think your divorce will be a fight, prepare to take the steps prior to the start of your divorce. Part of the divorce process is figuring out how you will pay for things until your divorce settlement is finalized.
Despite significant gains by women, in many marriages it is still the husband who earns the larger (or the only) income and controls family finances. I will have clients who are unaware of their spouse’s exact income, how it is invested, how much is accessible, and how many and what type of accounts they own.
During your marriage, you and your spouse likely had a joint account(s) from which household bills were paid. Once one of you files for divorce, withdrawals from these accounts may be legally restricted through an Automatic Temporary Restraining Order (ATRO). This is a court order prohibiting either spouse from making certain financial changes once a divorce action begins.
So, if you’re about to file for divorce (or you think your husband may be), planning for your immediate financial needs becomes a question of timing. You will likely want to withdraw money from joint accounts and set it aside for your needs. When, and how much should you withdraw?
Clients generally have a right to one-half of the value of the jointly titled funds. In New York or California, the ATRO restriction prevails so prior to any divorce papers being filed, you can withdraw any amount you would like up to 50%. The problem is, the other spouse may have reimbursement claims etc.
Keep in mind that withdrawing money from accounts could start the divorce off in the wrong way. A spouse could feel that the other was divorce “planning” and will seek vengeance. The more civil way would be to get an advance distribution of funds at the outset of a case if a client feels that maintaining expenses will be difficult during the pendency of the proceeding.
Another approach to the joint accounts is to try to talk prior to withdrawing from it. You can speak to your spouse about closing the account and equally dividing the monies. If that is not possible and you cannot communicate, you should not take more than 50% since you will likely not be entitled to no more that amount.
Advising your spouse and communicating prior to removing monies from joint accounts is more advisable than depleting the accounts without the other spouse’s knowledge. Even though the spouse is acting merely to safeguard some funds for security purposes, the other spouse will interpret it as an initiative to liquidate and dissipate assets and act in kind. Then the game playing starts.
While I agree that on a conceptual basis, communicating and discussing what to do with joint accounts and other assets prior to filing the divorce paper is the “nice” thing to do, there may be self-protective measures that may be practical under certain circumstances.
Such practical acts are something that I would discuss with a client prior to any divorce papers being filed. Many spouses are caught off guard and tell me “they did not see this coming”. So they are left not knowing where the assets are kept, how much they have, where the cash is hidden, and why the joint funds have been withdrawn.
Contact my office at 310-601-7144 or email me at [email protected] if you have any concerns or questions.