Your Bank Account and Divorce

When contemplating a divorce, one of the key concerns people have is related to financial assets. A common question is whether it’s legal to empty a bank account before or during a divorce in Alabama. Divorce can be emotionally charged and complex, especially with significant financial stakes. It’s important to handle this matter carefully to avoid legal issues or unintended consequences.

The Basics of Marital Property in Alabama

In Alabama, divorce laws follow the principle of equitable distribution. This means that marital property is divided fairly, though not necessarily equally, between both spouses. Marital property includes assets and debts accumulated during the marriage, like bank accounts, real estate, and retirement funds. This applies regardless of who is named on the account or title. If a spouse empties a joint bank account or withdraws significant funds during divorce proceedings, it may be seen as an attempt to deprive the other spouse of marital assets.

Legal Implications of Emptying a Bank Account

Alabama law imposes strict guidelines when it comes to handling marital assets during a divorce. If you withdraw all funds from a joint bank account or your personal account that holds marital assets, you may face serious legal consequences.

Courts will look unfavorably upon attempts to hide or deplete marital assets, especially when done in bad faith. Judges have the authority to require you to repay the funds or adjust the final division of assets to ensure fairness. In more severe cases, you could be subject to contempt of court charges or even accusations of dissipation of marital assets.

Dissipation involves the wrongful use of marital assets to reduce what’s available for division during a divorce. Alabama courts take dissipation seriously and may penalize the spouse responsible by awarding a larger share of assets to the other party. Common examples include spending on extramarital affairs, gambling, or withdrawing money to block access.

Temporary Restraining Orders and Automatic Financial Freezes

In some divorces, a spouse may request a temporary restraining order (TRO) to stop large financial transactions during proceedings. These orders can freeze joint accounts or limit access to funds, maintaining the financial status quo. In Alabama, some counties automatically issue standing or financial restraining orders to prevent either party from dissipating marital assets.

If a TRO is in place and a spouse empties a bank account or attempts to move funds without the court’s approval, they may be in violation of the order, leading to penalties such as fines or contempt charges. To avoid these issues, it’s crucial to consult a divorce attorney before making any significant financial moves during a divorce.

Exceptions: What You Can Do with The Money in Your Bank Account

Draining bank accounts before a divorce is usually unwise, but exceptions exist. Both parties may need funds for housing, food, child care, and attorney fees. Courts understand that life continues during divorce proceedings, and reasonable spending for necessary expenses is typically allowed.

However, it is essential to keep detailed records of any expenditures made during this period. Documenting all transactions will protect you if your spending is called into question during asset division. Working with a family law attorney can help you understand what expenses are considered reasonable and what may be viewed as dissipation.

Joint Bank Account vs. Individual Bank Account

The rules regarding bank accounts can vary depending on whether the account is joint or individual. Joint accounts are typically considered marital property, and both parties may have equal access to the funds within them. Based on this, even if an account is in only one spouse’s name, it may still be considered marital property if the funds were accumulated during the marriage. For example, a personal savings account opened after the marriage would likely be subject to equitable distribution.

If the account in question contains separate property, such as money acquired before the marriage or through an inheritance or gift specifically designated for one spouse, it may not be subject to division. In these cases, it’s essential to prove that the funds were kept separate and not commingled with marital assets.

Steps to Protect Your Financial Interests

If you’re worried about your spouse draining joint accounts or misusing assets, there are steps to protect your financial interests.

Consult a divorce attorney: The most important step is to consult with a divorce attorney who can provide strong legal guidance and representation.
Open a separate bank account: If you don’t already have a separate account, you may want to consider opening one for your post-divorce life. However, transferring money from a joint account to a separate account may still be scrutinized by the court.
Document everything: Keep detailed records of all financial transactions and expenditures during the divorce process.
Consider a TRO: If you believe your spouse may try to deplete marital assets, discuss with your attorney the possibility of seeking a temporary restraining order to protect the marital estate.

Legal Help is Here from Trusted Alabama Divorce Attorneys with a Proven Track Record

If you’re considering or have filed for divorce, get the experienced Alabama divorce lawyers at Smith Law Firm on your side. Our skilled legal team understands the challenges of divorce-related property division and other family law matters. We have the determination to fight for your best interests. Reach out to us today and let us help you move forward to a brighter future, both emotionally and financially. To schedule your free consultation, call us at 334-702-1744 or contact us online.