Spouses intending to file for divorce can take steps to prepare in advance. The early stages of divorce often trigger a number of frustrating financial limitations. The courts might issue orders that freeze or close accounts. People may suddenly lose access to their credit cards and joint checking accounts.
Even if they can still access the accounts, they may worry about being responsible for a spouse’s overdraft fees or a maxed-out credit card. Many people prepare for divorce by establishing separate financial accounts. They may open a personal credit card and a new checking account. Unfortunately, doing so could have implications during property division proceedings later.
Spouses have to disclose all marital assets
During the property division process, spouses must provide full disclosure of their personal holdings and their financial obligations. Some of those resources and debts may be separate, while others are marital.
Contrary to what people might assume, a checking account opened in the name of one spouse is not automatically their separate property. The name on the account does not make it a separate asset. If one spouse funds an account with income earned during the marriage, then they have to disclose the value of those deposits during the property division process.
Even the separate credit cards that they open could lead to conflicts regarding the distribution of debts during divorce proceedings. Full transparency is typically necessary while dividing property, and spouses need to be ready to account for any resources they set aside to establish themselves after filing for divorce.
Learning about the rules that apply during property division may make it easier to successfully navigate a divorce. Separate bank accounts are often important in the early stages of divorce, but they may still be part of the marital estate for purposes of asset distribution.
