Should I Take Half the Money in the Bank Account?

Taking money from a bank account prior to or during a separation or divorce can feel like the right thing to do. In this episode, your host and guide, Attorney Leigh Sellers, discusses why your best move is to discuss your goals and the facts of your unique situation with your attorney before taking money or other assets.

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Key insights from the episode:

[1:19] – What is “marital property?”
[2:11] – When the clock stops on marital property in North Carolina and South Carolina.
[3:09] – Potential consequences to consider prior to taking assets
[4:53] – Should you keep putting money into a joint account?
[5:40] – When taking funds from a joint account may be the right move.
[6:11] – What to do if your spouse has taken all the money.
[6:58] – Things to consider before making substantial financial transactions during separation and divorce.
[8:23] – Should you hide money?

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The insights and views presented in “Welcome to Splitsville” are for general information purposes only and should not be taken as legal advice for any individual case or situation. Nor does tuning in to this podcast constitute an attorney-client relationship of any kind. If you’re ready for compassionate and reliable legal guidance on your journey through divorce, contact Leigh Sellers and her team (NC & SC) at http://www.TouchstoneFamilyLaw.com

Read Full Transcript

Hello there. Going through a divorce? Considering one? Sorry to hear that, but here you are. Welcome to Splitsville. You’ll find Splitsville to be a pretty unique place. A new world really, with its own rules, its own expectations and in many ways, its own language. But don’t worry, you have a knowledgeable guide along the way, a family law attorney with three decades of experience under her belt.

And now, here she is. Your host and guide, Leigh Sellers.

Hi everyone, and thanks for tuning into another episode of Welcome to Splitsville. I’m your host and guide, Leigh Sellers, founder of Touchstone Family Law. And, in this episode, I’ll be answering another question that many newcomers to Splitsville have, “Should I Take Half the Money in the Bank Account?” So let’s dive in.

The answer to that is really it totally depends. It’s going to be very, very important to understand the entire facts of your situation and your property and money before anyone can give you an answer to that. So let’s back up.

First of all, if you’re going to take money out of an account, we would want to make sure that you were ultimately entitled to some of these funds because otherwise you’re just going to have to turn around and give them back. Marital property is property that is accumulated during the marriage and it doesn’t matter how it’s titled. If the marriage accumulates property or debt or cash it’s marital property that both of you’re entitled to. So when you’re taking something you’re entitled to, you don’t really have a lot of problem with that. If you’re taking somebody else’s money, that’s going to be a problem.

So when marital property starts being accumulated is easy. It’s when you get married. So from the day you get married moving forward everything is marital and it doesn’t matter whether you put the account in your name or the car in your name or your spouse’s name. It’s going to be marital, it’s going to be considered a fruit of the marriage.

There’s a different ending date for what stops accumulating marital property. In South Carolina it’s the first of whether you file a lawsuit in court or execute a separation agreement, property settlement agreement. In North Carolina it stops being accumulated as marital property when you stop living together as husband and wife. So the end point is different in both states. You want to make sure you’re talking to an attorney about what is marital property as you’re getting towards the end of your marriage, but if you accumulated it during the marriage and it’s in existence and you haven’t separated yet, it’s going to be marital property in most circumstances.

But there are some exceptions. I’m not going to go through all of those right now, but that’s why it’s very important before you start taking things and making big changes in your finances that you do need to talk to an attorney first because you want to make sure there’s not going to be a serious consequence to your actions.

The impact of taking it whether or not there’s a legal consequence to it or not is also something that we want to talk about because there’s an emotional component and there’s a practical component. So when you’re looking at taking money, cash, assets out of the control of the other person, you can imagine they’re not going to be happy about it. There has to be a discussion about whether that’s important that they’re unhappy about it.

Certainly if you are going to leave a depended spouse or your children without access to the funds that they need for daily living, you’re probably going to experience some severe consequences for taking that action. That’s definitely one of the things we have to consider. If you are taking cash out of an account, does the other spouse or other parent have access to other funds that they can still use to take care of themselves and their children? That’s going to be very important.

You don’t want to do something that looks mean or something that shows a complete disregard of the needs of the people who are in your family. There is going to probably be a problem with that and I don’t like four judges to be unhappy with my client in an early stage of a case because I don’t want it to affect or color the way they look at my client throughout the entire process. So if you start out and you create a perception with a judge that you’re unreasonable or a jerk, then it could carry with you through the entire process and it could hurt you in an area that’s much more important to you than how much cash was in that bank account. So there’s a perception issue that I think we have to talk about as well.

The other question is, do you keep putting money into a joint account if you’ve separated or you are leaving your spouse? That’s another question that we like to discuss with you and see what’s the impact of that. If you quit putting money in that account, is the mortgage payment going to bounce? If you quit putting money in that account, are we going to have a lot of bank fees created? What is going to happen if you make that change?

By and large marital property is something that both of you are entitled to, and so if you’re taking a portion of something that you’re already entitled to, if you’re taking a portion of something that is going to be split between the two of you going forward, it’s not necessarily that you’re doing anything wrong. It’s how you do it that would be important. Are you doing it without notice to the person?

Sometimes I would recommend that a spouse take money out of an account when they leave their spouse because I believe that if they do not, they will be cut off from every other avenue of support, and I know that they’re going to need the protection of having at least that much cash until we can get in front of a judge to secure support for them or to secure other assets for their support. Sometimes I’ll even recommend it when people aren’t thinking about it, but sometimes I have people who come in and have been cut off from finances and I’m immediately calling the other attorney or filing paperwork in court to get it resolved because it’s we’re very worried that it’s going to disappear or we’re not going to be able to follow it.

I would not ever recommend that you take that action without talking to an attorney first. It’s not going to be the way you want to get your separation or divorce started. Every attorney is going to have different recommendations depending on the facts of the case, and every attorney is also just going to personally have a different philosophy on how those things should be handled. But I would not make that decision on my own.

The same thing goes for running up big debts or taking out loans on your 401k or selling things. You want to be careful doing those things right around the time that you’re separating because the court can go back and look at that pre-divorce, pre-separation planning and hold you accountable for it. But if you’ve already done it or you’re going to do it despite my advice or anyone else’s advice, I would recommend that you keep very good records. You want to be able to show where that money is now, and if any of it it’s gone, you want to show where it has gone because you could be asked to answer for it.

For example, if you get a bonus and you decide to divert it to a separate account and not put it in your joint account, and yet you take that bonus and you pay off the home equity line on your marital house, that’s not necessarily going to bother anybody because you took a marital asset which was a bonus you earned and you paid down a marital debt which was a debt on the family home. So that while you didn’t give the other person the opportunity to speak to how that was spent, that might be such a good financial decision that you don’t experience any consequences that are negative or impact the case going forward. But having proof that that’s what you did with it would be very important.

A lot of people ask should they hide money? No. You are going to have to disclose where money went. They’re going to look for what you earned and where it went. People can subpoena your records directly from your employer and find out that you got that bonus. They can find out that you got that raise. They can find out from your taxes and your tax returns and your W-2s or 1099 that you earned that money and they could basically look at your bank account and go, “Wait a second. It didn’t all go here.”

This stuff always ends up coming out. No attorney that’s working a case is stupid. We can all do a little bit of forensic accounting, and if we see something we’re going to hire somebody to do it even better. There is almost always a paper trail, almost always. So don’t try to outsmart the system because if you do something that instantly makes you look devious, everything that you do for the rest of the case is going to be scrutinized so much more carefully because you’ve already proven yourself to be capable of lying and hiding, and that just is going to lower the court’s trust in you tremendously.

If you’re not ready to disclose it to your spouse yet, just at least make sure you’ve got fabulous documentation of what you’ve done with those assets and a good explanation as to why you did it and keep in mind how it’s impacting the other person. If you take money and only spend it in a way that benefits you and it hurts the other person, even if you can account for it, you may find that the court is going to do the rest of the award very differently just based on that.

I don’t recommend any unilateral acts without really looking at the situation holistically and talking to your attorney and saying what your overall goals are for your property split, what are your overall goals for financial contributions and cash flow. Don’t react in a vacuum thinking about one account or one thing. You want to sit down with your attorney and to the best of your ability look at what the long term goal is and see how accessing this particular account is going to impact your ability to get to your long term goal. So the short answer is you can, but the question is should you?

So there you have it, another neighborhood of Splitsville explored. There’s still so much to learn here, so I hope you’ll tune into the next episode. While Splitsville is not a fun place to be, thankfully it is full of helpful people, valuable resources and sound advice, if you know where to look. See you next time.

The insights and presented in Welcome to Splitsville are for general information purposes only and should not be taken as legal advice for any individual case or situation. Nor does tuning into this podcast constitute an attorney/client relationship of any kind. If you’re ready for compassionate and reliable legal guidance on your journey, contact Leigh Sellers and her team at touchstonefamilylaw.com.

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