How A Joint Checking Account Impacts Your Divorce In California

Divorce is a multistep process, one of which is the division of property between spouses. Many couples are often not on the same page, especially regarding their hard-earned money. 

In California, a joint checking account is considered a form of community property unless the account itself is expressly designated as distinct property.

Here’s what you should know about property division and how sharing a checking account can affect the process.

What is Marital Property?

Marital property is the property that is owned by both spouses, whereas separate property is only legally owned by one spouse. 

While not all states adhere to community property laws, California is one of nine that do. To put it simply, community property laws state that couples must split all communal property equally. Also known as equitable distribution, a 50/50 split should be a fair trade for everyone, right?

Not everyone wants fair treatment for their partner who just broke off their 10-year marriage. Luckily, negotiations about a property don’t always have to happen between spouses: Talking with a mediator or having a court decision can make this process much smoother.

In addition, any prenup agreements signed at the beginning of the marriage will almost always precede any other decisions or offers made during a divorce. 

After a marital property is accounted for and valued, the couple or the court can decide how to divide it. A 50/50 division is what community property states strive for, but this doesn’t mean you’ll both own half the house (unless you want to do that).

Usually, separating spouses will trade some assets for others, such as a spouse taking on full ownership of debt to keep the house or selling your business shares to your partner to retain all of the retirement funds.

If the couple can’t agree on any offers, the court will look into various factors to determine the distribution of assets, such as each spouse’s contribution to the marriage.

Joint Bank Accounts

For example, your spouse has the right to withdraw some or all of the last paycheck you just deposited. After signing up both of your names for one checking account, your money is now their money. As a result, your shared income becomes marital property.

Since joint checking accounts are listed as community property, unless they’re labeled as separate from their opening, their contents are subject to division. 

While each spouse has the right to deposit and withdraw money from the joint account, completely emptying it will often lead to heavy consequences. Doing so gives the judge the ability to offset the remainder of your assets that you would receive and even fine you for your actions.

In addition, a financial misconduct with your pooled income may lead to:

• Having to pay for your ex-spouse’s attorney fees
• Higher alimony payments or receiving lower/no payments yourself
• Depriving you of more assets to maintain an equitable distribution
• Other penalties

During a divorce, it’s better to avoid withdrawing any money from your joint checking account unless necessary. Sometimes, the court will issue an order to halt all withdrawals. 

You must comply with any order the court gives you. If you and your spouse don’t receive a restraining order on withdrawals, you’re still within your rights to deposit/withdraw money. However, be cautious and keep track of your transactions because any violations may hurt you in the final decision on property division. 

Intentionally spending money to “punish” your spouse doesn’t go without its repercussions. It will not look good if you gamble away all your money before the divorce is finalized.

Be careful depositing your paychecks into your joint account after you and your spouse are technically separated. At this point, your money will count as separate property. 

What’s Next For You

However, you do not have to go through this process alone. Hiring an expert can ease your divorce blues and save your money from being handed to your partner, who may not have contributed as much or spent more than their fair share right before your date of separation.

Here at Miod and Company, we want to help! Call or email us today and find out how we can best support you in navigating through issues about joint checking account funds.