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Divorce and Separate Bank Accounts: Is My Money Safe?

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Many married couples choose to keep their money in joint bank accounts, which gives each spouse equal access when it comes to paying utility bills, purchasing groceries, and making mortgage payments. Others may keep most of their income in a joint account, but use a separate account for savings and retirement funds. However, some married couples have completely separate bank accounts, which could cause the couple to wonder if their separate funds are solely theirs. But in most divorces, this is not the case. 

In this blog post, we will cover divorce and separate bank accounts, and how assets are divided when a couple does not keep funds in a joint bank account.

Will a Separate Bank Account Protect My Assets?

A question commonly asked by couples enduring divorce is “will a separate bank account protect my assets?” And indeed, some people have kept their finances separate from their spouse for the entire marriage in the hope that it will remain their property. But contrary to what some married couples may believe, just because someone’s name is on a bank account does not mean that all the funds belong solely to them. Even if your name is on the account and your spouse’s money has never touched it, you’re not guaranteed to receive all or any of the money in the account.

Are Separate Bank Accounts Marital Property?

In most states, money in separate bank accounts is considered marital property, or property acquired during a marriage. About 10 states operate under community property laws, meaning that any property — money, cars, houses, etc. — acquired during the marriage belongs to both spouses. But the rest of the country — North Carolina and South Carolina included — abides by equitable distribution laws, meaning that property acquired by a spouse during the marriage is that spouse’s property. 
Equitable distribution law may sound simple, but it can get complicated if the divorce is contested in a court of law. Attorneys will most likely be able to argue that this property should be seen as “marital property” and that it should be split fairly between the spouses. The only way to avoid this is if the couple entered into a prenuptial agreement stating that all property acquired by a spouse during a marriage belongs to that same spouse.

How Are Bank Accounts Split in a Divorce?

If you are considering ending your marriage, you may be wondering how assets get divided in a divorce. When a divorcing couple enters into mediation or if their case is seen by a judge, the focus will be on dividing all assets fairly — though not always equally. The funds held in separate bank accounts are no different. If the bank account was made or used after the marriage began, the funds are often divided between both spouses. This is because of the concept of “commingling” which happens when assets are used by both spouses. 
For example, even if only one spouse’s name is on the house in which they both live, the couple is commingling that asset because both spouses consider it to be their home. The same concept applies to money. Even if one spouse’s name is on the account, the funds can be used to pay for groceries, mortgage payments, utility bills, or child care. In these cases, attorneys handling the divorce can argue that the funds are commingled and should be divided, or that they should remain separate.

When Are Separate Bank Accounts Considered Separate Property?

Though exceptions may be argued in a court of law, separate bank accounts may be considered separate property in the following cases: 

  • No money acquired during the marriage was added to the bank account. If any income earned during the marriage is placed in this account, it is considered commingled. 
  • The other spouse’s name was never added to the account and none of their income was deposited.
  • No financial gifts bearing both spouses’ names were deposited in the account. Any gifts or inheritance should bear only the account holder’s name — otherwise, the money is considered commingled.

Contact a Property and Debt Division Lawyer

If you are going through a divorce and are not sure how to divide funds in separate bank accounts, you need the guidance of an experienced marital property and debt division attorney in North or South Carolina. Divorce is marred by emotions, anger, and hurt feelings, and the division of property can sometimes get ugly. With the help of attorneys at Collins Family & Elder Law Group, you can better understand your rights and how to navigate the division of assets in your divorce. Call us today at (704) 289-3250 or contact us online to request a case consultation.

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