Joint Accounts: What Should We Do?

As a given marriage travels down the road towards dissolution, many loose ends will need to be tied up. Some of the most significant of these will be of a financial nature, specifically, the joint accounts once shared during the marriage. Savings and checking accounts, credit cards, equity credit lines, safety deposit boxes, investment and similar type holdings, and property ownership are some of the issues, to name a few, that will have to be resolved before the actual final divorce can be granted.

Obviously, all joint bank savings and checking accounts will have to at some point be liquidated  and, in some proportion, divided. It is often advisable at the time of separation to open a new checking or savings account in your own name only, and to try and deposit some monies into it. Remember that you cannot cut the other party off financially and you cannot close accounts after the Domestic Automatic Injunction has been issued, immediately after the petition for divorce has been filed. It is not recommended that you close accounts prior to the petition being filed, as it may be seen as acting in bad faith and will complicate the divorce process.

Joint Bank Accounts

All bank accounts are covered by the automatic injunction. In dealing with the joint accounts, there are a few logical options available to you and your spouse. The first would be for one spouse to take out half the money in the joint account and deposit it into their own, new individual account, for all intents and purposes leaving the joint account as the others individual account; however, an agreement on how to pay the family/household expenses and debts will have to be reached first. Another approach is for the parties to agree that each will receive a specific amount of funds per month to be deposited into a new account for each party and leave a specific amount in the joint account for family/household expenses and debts to be paid from. Still another approach is to ask your banking institution to “freeze” the accounts in question and not allow monies in or out of these accounts without authorization by both parties.By not addressing this issue, you will give your spouse the opportunity and means to liquidate a specific account without your knowledge, leaving a startling discovery to be made in the future. While in the event of this occurring, the court will likely provide for reimbursement, the actual receipt of such could be months or years in coming, leaving you to deal with the consequences in the immediate future.

Joint Credit Cards

All credit cards fall under the automatic injunction. You do not necessarily need to close joint accounts. You and your spouse may reach an agreement that the account will be awarded to one of you. However, it is important to keep statements of all credit cards from the date of separation. If you and your spouse agree in writing to close joint credit cards and the like, formally write to the creditors and notify them of the impending divorce. Request that the account be closed and that the cards be canceled. Ask them to provide a current statement of account and make them aware of the fact that you do not intend to be held liable for any and all debt accumulated after the date of the written letter. It is not unwise to send these letters by certified mail to retain proof of receipt by the creditors. In some instances, the creditor will ask that the outstanding balance on an account be paid in full. If it is possible to comply with this, then do so. If not, at the very least, have them place the account on inactive status so that no new additional charges may be added and stipulate that once the balance is paid in full, the account is to be closed completely and forever. If one of the parties wishes to be awarded the account, then establish the date that spouse will be responsible for all new charges, and the other spouse is no longer going to have new charges added.

Equity Credit Lines

One aspect of joint credit that some people tend to overlook would be an equity credit line. The automatic injunction covers all lines of credit. Equity credit lines are an open-ended loan granted by an institution, usually a bank, with your martial property used as security. The lender places a lien against your home which is recorded on its title and can force the sale of your home to recoup its money should you default on your payments. If you are unclear as to whether or not there is such an account open or cannot remember from which institution one was opened, you can contact an attorney or title insurance company and ask that a “search” be done on your property. While this does in fact cost money (usually a little over a hundred dollars) the title company will deliver a complete list of liens against your property. If there is found to be such an open account, again, as with other credit lines, contact the institution asking them to freeze the account. With an equity line of credit left open, you are exposing yourself to additional debt during the separation period.

Security Margin Accounts

Similar to an equity line of credit would be something known as a margin account, also covered by the automatic injunction. These types of accounts are available through stock brokerage houses. This works very similarly to the equity line, with your stockholdings acting as the security. Follow the same procedure used for credit cards and equity lines of credit so that your spouse cannot withdraw money, trade stocks, or draw profits without your knowledge.

Safe Deposit Box

If a petition for divorce has been filed, the automatic injunction includes safe deposit boxes, which should be left intact by both parties. However, there is perhaps no asset quite like the safe deposit box in terms of its ability to be emptied with little effort. Quite literally, whoever gets there first has the opportunity to grab the contents and run. The optimum would be to obtain possession of both keys, and if distrust prevails, to surrender both keys to an officer of the bank. At the very least, try to make an inventory of the box and take photographs of such. Then have an officer of the bank sign your inventory, thereby preserving a record of what was in the box.

Joint Investments or Other Holdings

To thoroughly protect any joint investment or other holdings, make a complete list of all such assets. Again, the domestic automatic injunction covers these holdings, and these investments should not be moved or transferred without both parties agreeing in writing or without a court order.  Promptly contact your broker or other financial officer and inform him of the impending divorce. Request the most current statements so that division of these assets can be handled accurately.

Real Estate Property

Most married couples hold property, specifically real estate property, in a manner known as joint tenancy. Joint tenancy means that when one joint owner passes away, the other owner(s) automatically inherit the deceased owner’s portion of the property without having to travel the long and costly probate process. If you are afraid you might die during the divorce process and do not want your share to automatically revert to your spouse, you can change your title status to reflect tenancy in common. Tenancy in common, like joint tenancy, provides for equal shares, however, if you die, your share will be passed to whomever you’ve designated in your will or estate planning document. However, in accordance with Utah law, if you die and there is no will or estate planning document, your share will pass automatically to your spouse. To formally change the ownership status, you must execute a deed clearly stating this change.