If you find yourself constantly worrying that you’ll discover your soon-to-be-ex has cleaned out your joint bank account, keep reading. We talk with people every day who are considering separation or who believe their spouse might be considering it, and this is a fear at the top of every list. Given that it could leave you with no money to pay your household expenses, buy food, provide for your children, or pay your attorney, it’s certainly not an unreasonable fear.
There are some cases where a spouse may empty the joint account at the very beginning of a separation as a kind of preemptive strike meant to deny their spouse access to money to hire an attorney in the first place. However, the question everyone asks is whether or not it’s “legal” for a spouse to empty a bank account, and then what happens if they do it?
Rights to a joint account
First, it is important to understand that when a bank account is titled jointly in two peoples’ names, each of them has an equal right to the funds in that account. So if one of them chooses to empty the account, he or she technically has the legal right to do so, however, that action, especially when it leaves the other spouse penniless, may have repercussions later. This rule applies equally to married to non-married couples, too. In other words, if one spouse has an account titled with a parent or other family member, either of them may remove some or all of the funds from that account. For this reason, it is important to always know where money is located and how each account is titled.
When is reimbursement required?
If your spouse empties an account that held marital funds, it is likely that the Court will not be impressed, no matter how strategic the move may have been at the time. The Family Court will generally require some or all of the funds to be reimbursed to the spouse who was left without access to the money. Remember, Family Court is a court of equity, meaning it expects parties to act in good faith and it has the ability to remedy situations in which one or both spouses choose not to act fairly or equitably with each other.
However, it’s important to note that if one party can prove to the Court that the money in the bank account was actually his or her separate property then they may not be required to reimburse the money at all. A great example of this is when one spouse receives a gift or inheritance from someone. If the money in the account can be shown (or traced) back to that gift or inheritance, the Family Court will likely rule the money to be “separate” or “non-marital” money and the spouse who took it gets to keep it. This is one more reason we advise all of our clients and potential clients to keep accurate and diligent records for all financial transactions and a list of all active accounts during a marriage.
Additionally, the court will also take into consideration the reason(s) for which the money was taken, as that is often quite important. For instance, if the account was emptied as a preemptive strike or purely for selfish reasons, a judge is more likely to order the money or a portion of it to be returned. However, if the funds were used to pay joint marital bills or to keep the marital property from being repossessed, it will be less likely to be reimbursed. The same will likely apply to funds taken to pay for children’s expenses, to hire an attorney, to pay basic expenses, or if the spouse is unemployed through no fault of their own. The bottom line is that in the case of an empty bank account, the motivation of the “taking” party will often matter a great deal to the Family Court.