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What can (and can’t) you do with joint/shared money during divorce?

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Both parties have an equal right to the funds held in a joint account, regardless of who deposited the money. This means that either party can empty the account and the bank or building society will be unable to reimburse the affected party. But what can, and can’t you do with joint monies during divorce? We look at issues.

Joint accounts in divorce

When a married couple opens a joint bank account, both spouses have a legal right to use the money, even if one partner contributed the majority of the funds. This principle remains in effect unless there is clear evidence to the contrary, such as a pre or post nuptial agreement specifying different terms of ownership.

The concept of joint ownership implies that either spouse can withdraw money from the account without needing the consent of the other. This becomes a potentially contentious issue in the context of divorce, where one party might fear that the other will empty the account, leaving them without access to crucial funds during a vulnerable period.

Can you withdraw or empty the joint account?

As both parties have equal rights to access joint funds, as previously stated either spouse can withdraw or empty a joint bank account without the other spouse’s permission. This might seem unfair; however, in legal terms, both parties are co-owners, and therefore the bank or building society will not intervene in disputes over the money.

While it may be legally possible for one party to withdraw all the funds, this does not mean it is without consequence. The court will take a dim view of any party acting in bad faith during divorce proceedings, particularly when it comes to financial matters. If one spouse empties a joint account to deprive the other spouse of access to money, this can significantly impact how the financial settlement is decided later.

Under the Matrimonial Causes Act 1973, the court has the power to divide matrimonial assets fairly, taking into account various factors such as the contributions of each spouse and their financial needs. If one party is found to have misused or hidden joint funds, the court may order them to return the money or adjust the financial settlement accordingly to ensure fairness.

Can you close the joint account?

Either party has the legal right to close a joint account, but doing so during the divorce process may be frowned upon, especially if it was done unilaterally or with the intent of preventing the other party from accessing funds.

Closing a joint account in anticipation of divorce may seem like a strategic move to some people, but it can have serious financial and legal implications. If the closure leaves one spouse financially disadvantaged or unable to pay for basic living expenses, the court may intervene.

How can I safeguard shared assets during divorce?

To prevent contentious situations involving joint funds, divorcing couples should consider taking steps to safeguard their shared financial assets. For example:

  • One option is for both parties to agree to freeze the joint account until the divorce is finalised or a financial settlement is reached. This ensures that neither spouse can withdraw or transfer money without the other’s consent. Freezing the account requires the cooperation of both parties, or alternatively, one party can apply for a court order to freeze the account if they suspect that the other party may misuse the funds.
  • It is often wise for each spouse to open separate bank accounts early in the divorce process. Any future income, such as salary or benefits, can then be directed into their personal accounts, reducing the risk of disputes over new funds.
  • Couples who are in the midst of divorce proceedings may wish to agree on what constitutes a reasonable use of joint funds until a settlement is reached. This could involve drawing up a list of necessary expenses, such as mortgage payments or children’s school fees, and ensuring that both parties stick to this agreement.
  • If there is a risk that one spouse may misuse joint funds, both parties may benefit from attending mediation. Mediators can help couples reach agreements regarding the use of joint finances and prevent escalation to court action.

What should you avoid doing with joint money during divorce?

There are several actions that spouses should avoid during a divorce if they wish to prevent future legal complications:

  • Emptying a joint account without consulting the other party, especially if done out of spite or to disadvantage the other spouse, is likely to backfire. As discussed, courts can adjust the financial settlement to compensate the spouse who was deprived of access to funds.
  • Using joint funds for excessive or frivolous purchases during the divorce process can be seen as a misuse of marital assets. If the court deems that one spouse was wasteful with joint money, they may adjust the financial settlement to compensate the other spouse.
  • Attempting to hide joint funds by transferring them to a private account or overseas could result in serious legal repercussions. Not only could this lead to an unfavourable financial settlement, but it could also expose the spouse to claims of dishonesty, damaging their credibility in court.

While both parties have equal rights to the money held in a joint account during divorce, there are limits to what they can (and should) do with these funds. While it may be legally permissible for either spouse to withdraw money or close the account, acting in bad faith by draining the account or misusing joint funds will probably have consequences during the financial settlement process. To avoid unnecessary conflict and protect shared financial assets, divorcing couples should aim to reach agreements regarding the use of joint funds or seek legal intervention if necessary.

The best way to ensure fairness and protect your financial interests during divorce is to seek legal advice. Working with a solicitor or financial advisor can help you navigate the complexities of divorce and reach a settlement that reflects your individual circumstances.


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