One of the most common questions we are asked is “how bank accounts are to be handled in a Louisville divorce?” Divorce can be emotionally challenging for most former spouses. When money comes into the mix it may only seem to get worse. So what do you need to know about how your bank accounts are to be handled as you begin, move through and ultimately complete the divorce process?
The first and most important thing to know is your “fiduciary duty.” One of the first orders issued by the Court after filing a divorce has to do with financial matters and the fiduciary duty each spouse owes the other until the date the divorce is finalized. A fiduciary duty basically requires you to conduct financial affairs and decisions with the best interest of your former spouse in mind. If one party squanders assets or attempts to run up the credit cards prior to or during the divorce the Judge can and will deduct these from the party’s share of marital property. In serious cases of mismanagement or hiding assets the Judge may impose heavy financial penalties known as “sanctions.”
The next thing you need to know about how bank accounts are to be handled in a Louisville divorce is it doesn’t matter who’s name is on the account. An account will be considered to be a marital account if the account was opened prior to the date of the marriage or after the date of separation. Any account which was blended with the marital funds of the former spouses will also usually be considered to be at least partially marital property.
Marital property is to be equally divided between the parties.
Therefore, bank accounts established after the date of the marriage (in the name of either party or both) are marital property and available proceeds are to be divided equally.
There may be bank accounts which are the “separate” property of one of the parties. If either party already had a bank or investment account prior to the marriage, and never commingled marital funds with the separate account it should remain outside of marital property.
For example, a prenuptial agreement may specify specific accounts as the separate property of a spouse. Business accounts should always be separate from personal accounts and the business and related accounts will be subject to the same scrutiny: marital property or separate property? Inheritances and gifts must be carefully structured in order to remain separate property for the recipient.
Retirement accounts including pensions, 401(k)s and other vehicles are also divisible when they are marital property. This process requires a very technical legal document known as a Qualified Domestic Relations Order or QDRO. The QDRO must be precisely worded and structured to ensure the retirement account can be properly divided as part of the divorce.
If you have questions about how bank accounts are to be handled during a Louisville divorce you need to speak with the divorce and family law attorneys at Dodd & Dodd.
We invite you to review the strong recommendations of our former clients and contact us or call 502-584-1108 to schedule an appointment with one of our experienced divorce and family law attorneys.
