Getting Divorced? Here's What Happens to Your Joint Bank Account

There's nothing easy about divorce, including the need to protect your assets.

Susan Myres, president of the American Academy of Matrimonial Lawyers, told ABC News that divorce lawyers were bracing for a surge of filings after pandemic-related confinement ended. The dismal outlook regarding matrimony in the U.S. may have been foreshadowed by what's happening in several Chinese cities, where a record-high number of divorces have been initiated.

Yet, interestingly, the divorce rate in the U.S. fell by 12% during the pandemic. Perhaps there were bigger fish to fry during that time, or maybe couples decided to wait it out. Whatever the reason, we know "money issues" is routinely listed as one of the top reasons for divorce, right along with infidelity and lack of equality.

If financial disagreements are a problem during marriage, the issue can be amplified during a divorce. If you're in the middle of a breakup, here are steps you can take to look out for your future financial life -- beginning with the marital joint bank account.

What is a joint bank account?

As the name suggests, a joint bank account is one owned by two or more people. Each party has the right to deposit funds, make decisions regarding the account, and withdraw money. If you are in the process of divorce, you and your spouse each have a legal right to empty the account. However, doing so is probably unwise.

Here's why: Courts typically view funds in a joint account as marital property. It does not matter which party deposited the most money or spent the most during the marriage; the money belongs to you and your spouse equally.

What could happen

Let's say your spouse empties a joint savings account without your knowledge. Depending on where you live, there could be legal repercussions. For example, if you have already filed for divorce and there is an injunction in place prohibiting you both from doing certain things (like withdrawing money), your spouse could be charged with criminal contempt. That's because the court wants to distribute all marital assets equitably. If anyone steps out of line, a judge may order that you both have limited access to the joint account until things are settled.

Your options

You cannot take your spouse's name off the joint account without his or her permission. Even if you've banked with the same bank or credit union for years, a financial institution is not allowed to help you cut your spouse off from an asset that is legally theirs.

Instead, try this:

If you and your ex are still on speaking terms, ask if they would like to close the account together and split the funds. If they're agreeable, immediately open a new account in your name only.

If you're not on speaking terms, don't panic. The next best thing is to speak with a divorce attorney. Ask if it is legal and proper in your state to withdraw half the contents of the account. Keep in mind that it may only be permissible if divorce proceedings have not begun.

If you're worried your spouse may withdraw all the funds, you might contact the bank, let them know that you are divorcing, and request that they freeze the account so that neither of you can clean it out. Ask your divorce attorney about informing your spouse that you have put a freeze on the account. If your spouse has a history of abuse or you are concerned that he or she will become violent, you might consider allowing the courts to deal with it in the final decree. It is not uncommon for the spouse who emptied a joint account to be ordered to repay half of what they took, sometimes with penalties attached.

Equitable distribution

Typically, the court will award each spouse half of the money held in a joint account. Even if one of you decided to take the money out to spite the other (or to cover immediate expenses), that person would have to cough up 50% to make the other person whole.

Closing your account

Once all funds have been distributed and the account has a zero balance, it is time to close it for good. Depending on your relationship with your ex, you can either close it together, or one of you can get the ball rolling and the other can sign documents later. Closing an account is as simple as showing identification and signing documents.

Before you close the account, though, make a note of any scheduled direct deposits and auto-pays. Immediately contact the parties involved to transfer those transactions to your new account.

Closing a bank account will not impact your credit score like closing a credit card does, and that's a good thing. Right now, your primary job is to focus on yourself, get back on your feet, and live the happiest life possible.