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Joint Accounts and Divorce in New Jersey
How are joint accounts distributed in a divorce?
Once a couple starts a divorce, there are many loose ends that have to be resolved. Some of the most important of these are of a financial nature. More specifically, all joint accounts that were shared during the marriage must be distributed. All joint savings and checking accounts, credit cards, equity credit lines, safe deposit boxes, investment and similar type holdings, and property ownership are some of the issues, to name a few, will have distributed as part of the divorce process.
All joint bank savings and checking accounts will have to at some point be liquidated and in some proportion divided. I always advise my clients at the time of separation not only to open a new checking or savings account in your own name only, but to try and deposit some monies into such. In this way, you will not only be guaranteed to have fiscal reserves in time of need, but that no one but yourself can access such accounts.
In summary, if the parties are civil in a divorce case, then the distribution of any joint accounts can be accomplished in a fair and reasonable manner. In many cases, the parties will exchange their Case Information Statements, and their account statements. Thereafter, the parties can then work out deal so as to fairly apportion the joint marital accounts.
Alternatively, some divorces can be a "war." In these types of cases, it is not uncommon for a spouse to withdraw all of the funds from a joint account, and then hide the money. In many cases, a devious spouse will empty out a joint account, and then try to hide the money with a relative or a new girlfriend. In some cases, uncovering hidden assets is more complicated than litigating divorce case. Uncovering hidden assets often becomes a separate case unto itself.
I recently filed for a divorce against my wife. How should I handle the joint accounts that I now hold with her?
In dealing with the joint accounts, there are several strategies to address their ultimate equitable distribution. I always advise my clients to freeze all of the joint accounts. A person who is getting divorced should request that their bank should "freeze" their accounts in question and not allow monies in or out of these accounts without authorization by both parties. This option should be pursued in any acrimonious divorce. Moreover, this option should also be pursued if one spouse resides in a foreign country.
A divorce can turn into a nightmare, if one spouse empties out all of the marital accounts, and then transfers all of the marital monies out of the country. I have had a case wherein a divorcing couple owned an internet-based business. The divorcing husband was originally from Columbia. The parties separated and the husband sensed a divorce was inevitable. Consequently, the husband then transferred the family's nest egg of approximately $100,000 to another bank located in his homeland in Columbia. These monies basically consisted of the couple's entire life savings. A New Jersey Family Court can order that the husband should return these monies to the United States. However, this type of order is essentially meaningless in many foreign countries. Furthermore, in this type of scenario, a person can expect to spend thousands and thousands of dollars in legal fees to try to recapture the monies that were transferred overseas. Therefore, to avoid this type of disaster a person should always immediately take any and all efforts to freeze any joint accounts if one spouse is originally from another country.
Another possible option is to deposit all of the marital accounts into one account. The couple could empty all joint accounts into one frozen account to be dealt within the same manner as the first option. A couple may also may opt for an "Escrow" account, in which an officer of the bank is assigned to monitor and must give written authorization with respect to any such account before any transaction may be conducted.
Finally, another option is that one spouse can take out half the money in a given account and deposit it into their own, new individual account, for all intents and purposes leaving the joint account as the other's individual account. If you don't address this issue, then you will give your spouse the opportunity and means to liquidate any joint accounts without your knowledge. It could be a sad day when you are startled to discover that your life savings that was held in a joint account has been wiped out! If this tragedy occurs, then a court will in most if not all cases will provide for reimbursement. However, it may prove to be impossible to actually collect any monies that were improperly taken from a joint account. It may take a person months or even years to try to collect the monies that were misappropriated from a joint account.
Once I file for a divorce how should I handle the joint credit card accounts that I now hold with my wife?
I always advise my clients to close out all joint credit cards once the divorce case is filed. Even if a divorce is filed, both spouses will still be jointly responsible for credit card debt that is charged up on a joint card. Therefore, it is imperative to close all joint credit card accounts once a divorce starts. If the credit cards are held under separate names, then there is no liability for the spouse whose name is not listed on the credit card. I have heard of "horror stories" when one spouse does not take his name off joint credit cards once a divorce starts. In many cases, a spurned spouse will try to ruin their mate's credit by ruining up the balances on any joint credit cards.
To close joint credit cards and the like, a person must formally write the creditors and notify them of the impending divorce. A person who is divorcing should request that the credit card account be closed and that the credit cards be canceled. Additionally, a person should also ask the credit card company 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 wise 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. Most of the time, these simple requests will be granted immediately; if they are not, contact a supervisor explaining you are going through a divorce until proper satisfaction is achieved.
I have an equity credit line on our marital home. Should I contact the bank and freeze the equity credit line once the divorce starts?
One type of joint credit that some people tend to overlook would be an equity credit line. This is an open-ended loan that is granted by an institution, usually a bank, with your martial property used as the 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 there is an equity credit line on your home, then you should immediately contact the bank and request that it be frozen. With an equity line of credit left open, you are exposing yourself to the possibility of losing your home.
I had one case wherein one spouse took out almost $120,000 of cash from an equity line of credit. The unsuspecting husband never was aware that his wife was draining all of the equity out of the marital home. It is not uncommon for a spouse to forge their mate's signature on applications to obtain cash advances on their equity line of credit. This type of fraud is exactly what happened in this unfortunate case. As a result, the devious wife drained out almost all of the equity of the marital home. Quite often these monies then are used to fund an extramarital affair. Even though this type of fraud is illegal, there really is no criminal exposure for a spouse if he or she drains the equity from the marital home without the other spouse's consent. Most County Prosecutors do not want to be bothered with marital type fraud cases. The prosecutors have enough drug cases and violent crimes to deal with.
I have a security margin account with my wife. What should I do with this account once I file for divorce?
Similar to an equity line of credit would be something known as a margin account. A security margin account is available through stock brokerage houses. This works very similarly to the equity line, with your stockholdings acting as the security. A person should 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.
My husband is a self-employed plumber. We have a safety deposit box that has thousands of dollars deposited in it. What should I do to insure that the cash in the security box is not removed and hidden during the divorce?
The distribution of a safety deposit box often arises when one spouse is self-employed, or if the family owns a small business. It is common knowledge that people hide money to save on taxes. Quite often the family deposits money in a safety deposit box, or in a safe that is located in the basement. Quite frequently, once a divorce starts, one spouse will rush to the safety deposit box or to the safe and try to empty it out and hide the money.
There is perhaps no asset quite like the safe deposit box in terms of its ability to be emptied with little effort. Unfortunately, the spouse who gets there first has the opportunity to grab the money and run. The banks do not check with the courts to see who is separated and who is not. If a safety deposit box is cleaned out, then there is very little chance that the contents will ever be recovered.
If a divorce is pending, then I would strongly suggest that a spouse go to the bank where the safety deposit box is located and request that it be frozen. I would follow up this request by sending it in writing via a certified letter. Bank officers literally "shake" when they are threatened with becoming entangled with any type of lawsuit. If a certified letter is sent to a bank that requests that safety deposit box be frozen, then in 99% of the cases the bank will honor this request.
At the very least, a person should try to make an inventory of the safety deposit box and take photographs of such. Then have an officer of the bank sign your inventory and in that way, if anything is later removed, you'll have proof of what was taken.
How can I protect my joint investments and other holdings once the divorce starts?
A major concern in every divorce case is to thoroughly protect any joint investments or other holdings. In order to accomplish this goal, a person should make a complete list of all such assets. Moreover, a divorcing person should promptly contact their broker or other financial officer and inform him or her of the impending divorce. A divorcing person should request that no stocks or other type of holdings should be moved, transferred without knowledge and written approval of both parties. Immediately send a statement to this effect in writing. Be sure to ask the broker or officer to make a note to the "on line" file on his or her company's computer system as an added safeguard. Given the sophisticated nature of today's markets, many of these types of transactions are conducted over the phone with the push of a button and can be concluded in a matter of minutes, so time is of the essence.
I am responsible for my wife's phone bill at the marital residence, and for her cell phone service. Should I take my name off of these accounts once I file for divorce?
Absolutely! If a person starts a divorce, then he or she should also call up the phone companies and request that their name be taken off of any and all phone accounts. I have had a case wherein a client was responsible for his wife's cell phone account. During the divorce, she met a "boyfriend" on the internet from London. She ran up a $5,000 cell phone bill. My client "threw up" when he opened up this bill. My client's name was on this account, and he is responsible for this bill. If he doesn't pay this bill, then his credit will be ruined. My client had a "mini-breakdown" when he opened up his cell phone bill and it had $5,000 worth of oversea charges from London. The lesson to be learned from this disaster is to terminate all joint phone accounts once a divorce case starts.
I am getting divorced and my wife is now living in the marital home? What should I do with the joint utility accounts?
I always advise a client to immediately close out all joint utility accounts once he or she leaves the marital home. I have had a case wherein a spurned wife ran up a $6,000 water bill to try to ruin her husband's credit. The devious ex-wife left the faucet on in the kitchen, and she also left the home for more than a month. Moreover, the wife did not advise the husband that she left the marital home. The water ran consecutively for almost 30 days nonstop. The water bill ran up to almost $6,000 before the husband could turn off the faucet. People become insane during a divorce! Reduce your exposure, and close out all joint utility accounts immediately once you separate from your spouse, or if you start a divorce case.
If the divorce is being filed under one of the seven fault grounds (including extreme cruelty, adultery, abandonment, substance or alcohol addiction, institutionalization, deviant sexual conduct and incarceration), the 18 month separation period, required for a no-fault divorce, is waived. However, each ground for divorce has its own stipulations.
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