During marriage, couples usually develop routines to pay for household bills and living expenses. Couples often pay for family expenses directly from joint banking accounts. But part of the divorce process requires figuring out how you're going to make ends meet while the divorce is pending, especially if you are a non-income-earning spouse.
Even affluent people experience difficulties securing funds to pay for their living expenses, let alone for the divorce attorney they need, while their funds are tied up and virtually frozen in the divorce.
If you’re going to file for divorce in California, or think the other party might be, it’s critical to get the timing right if you need to secure funds by withdrawing from joint accounts. It can become extremely complex, and it’s generally advisable to have the benefit of a good, experienced family law attorney.
Before you file for divorce, you can generally withdraw from joint accounts. But once one spouse files, withdrawals from joint accounts are legally restricted unless you and your spouse agree to disburse funds otherwise.
California law imposes automatic temporary restraining orders (ATROs) that prohibit either spouse from making certain financial changes once a divorce action begins. The purpose is to protect each party’s rights during divorce and to preserve the financial status quo. The ATROs are court orders. [i]
If you and your spouse can agree on an advance disbursement of funds at the beginning of the case, for example by dividing and closing an account, this can ameliorate some divorce stress. Each spouse has some financial security, and the boundaries and expectations are clear. The other benefit is that you’ve already taken care of one issue by dividing an asset. Cross that off the list.
But problems arise when one spouse has legitimate fears that the other will drain accounts, abscond with marital funds, or engage in an otherwise acrimonious divorce. This is especially threatening in cases involving abuse (whether emotional or physical) and domestic violence.
In those situations, before a divorce action is filed, you might consider withdrawing half of the funds in joint accounts. If you wait until after the divorce is filed, you may run into problems with violating court orders, access to these funds is not as easy, and it may take months to get a support order.
Still, taking this unilateral action can start a case off in the wrong way. It can be the match that ignites the powder keg of contention and litigation. It can cause a money grab that is difficult to unwind and may require expensive forensic accounting. It’s possible that the account is temporarily inflated in anticipation of paying certain expenses, like taxes. These are just a few reasons why deciding whether to withdraw funds from joint accounts is usually, frankly, a very difficult call.
In most cases, aggressively withdrawing more than half of the funds from a joint bank account will not give a spouse a long-term advantage. The withdrawal may even be used against the spouse making it. Neither party should act in derogation of the other party's marital rights, and there are penalties for violating marital legal duties of good faith and fair dealing.
This can cause a serious battle. If you do choose to withdraw all funds from a joint account, you must preserve the funds until the divorce is final. If you spend it, you will likely get less at settlement or trial, and you may be subject to serious legal and financial penalties.
[i] Family Code §2040
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