Settling Your Bank Account in a Divorce
Money issues can be stressful for spouses in the middle of divorce. Accordingly, conflict can escalate when a bank account and other financial assets must be divided in the course of divorce. Even in the best scenario, where there are no disputes regarding a bank account, the task of establishing whether the bank account is community property versus separate property can be a little contentious. Fortunately, for most couples, the separation of the community bank account is a simple process that will provide each person with half of the balance in the account.
Date of Separation
The typical divorce settlement is the equal division of the bank account as of the date of separation. Under California law, there is a two-part test to establish the official date of separation:
- There must be a physical separation between the spouses. Physical separation is easy to determine when one of the spouses moves out of the family home. If a couple still shares a home, the family court may also find a physical separation occurred when spouses began sleeping in separate areas of the same home.
- In addition to a physical separation, one of the spouses must have an intent to end the marriage. A judge will not accept a temporary or trial separation to satisfy this intent test. Once the separation is established, the community bank account will be divided equally, in most cases, to each spouse.
Division of a Community Bank Account
A community bank account is created from all the money earned or saved during the marriage from a community source. It should not have separate property claims of any kind to the money in the account. For example, a husband and wife who saved up $60,000.00 in their checking account as of the date of separation will each be entitled to $30,000.00.
Bank Account Separation and Conflict
Sometimes a spouse makes decisions based upon emotion in divorce. In some cases conflict can arise when spouses don’t amicably divide their bank accounts early on. A spouse may deposit post separation earnings or other separately traced funds into the account. In such a case, there may be a question as to what part of the account is community property and what belongs to each spouse.
Division of the bank account can also be a little confusing if money is spent from the account after separation. The family court will need to determine if community funds or separate property funds were used.
Separate Property Bank Accounts
Typically, a separate bank account is awarded to the spouse who owns it. A good example is if a wife has an account from the sale of property totaling $90,000.00 and she owned it prior to the marriage. If the account has never been combined with community funds and the husband has not been a named account holder, the money remaining in the account will remain the wife’s sole and separate property.
In addition to the rights of each spouse to the community bank account, there are also responsibilities as the account is part of the community property that must be divided in divorce. Before a spouse attempts to withdraw money from a community account it is advisable to seek counsel from a family law attorney who can explain California community property law. To receive a free consultation call attorney Michael Benavides at (916) 250-1610 Monday through Saturday from 8 AM to 6 PM.