Separate bank accounts are not divorce protection

On Behalf of | Jul 25, 2019 | Divorce

Millennials in New York and across the nation are departing from some of the typical marriage behaviors of older generations. For example, 28 percent of married Millennial couples are keeping their finances separate instead of having joint accounts. But separate bank accounts may not protect assets from property division if a couple divorces.

Separate accounts may be an effective money management tool, especially if both spouses work. However, money in these accounts may be considered marital property that should be divided during divorce because the money was arguably acquired during the marriage.

Even if kept in separate accounts, in New York these funds must be divided fairly which may not mean equally. A court may decide that the funds in one spouse’s bank account should be included in a settlement that is fair to both spouses.

A prenuptial agreement is one way to protect assets. It makes couples talk about their finances and discuss what assets should be marital property.

Another method is printing out or saving digital copies of all account statements for the month before the marriage. This may provide proof of the assets that each spouse had before they married if they ever need to divide their property.

Any inheritance that a spouse received during their marriage should also be kept separate. Using the money for home renovations, for example, may be considered as commingling the money and make it harder for the spouse to claim it as theirs. This can be even more difficult 10 to 20 years later.

However, separate accounts can have benefits during the divorce process. A spouse may have quick access to funds if the divorce becomes bitter and a spouse restricts access to funds in a joint account. If one spouse controls all accounts and credit cards, the other spouse may have to go to court and seek orders to pay for daily expenses such as child care, household costs or legal expenses.

As this shows, simply having separate bank accounts with no other protections will not necessarily protect those funds in the property division process. This post does not offer legal advice, so those who are wondering whether to open a joint account or who are wondering how to protect funds in separate accounts will want to seek professional advice.