When divorce becomes a possibility, it is natural to start wondering what will happen to your money.
Can your spouse take money from a joint account? Is the savings account in your name yours to keep? What about your 401(k)?
The answers depend on more than whose name appears on the account. Here is what you should know about some of the most common financial accounts in a Florida divorce.
First, Whose Name Is on the Account Does Not Decide Who Gets the Money
This is one of the most important things to understand.
Just because an account is only in your name does not necessarily mean you will keep everything in it. On the other hand, having both spouses' names on an account does not necessarily mean every dollar in it will simply be split down the middle.
Florida uses equitable distribution to divide marital assets and liabilities during a divorce. The court begins with the premise that marital assets and liabilities should be divided equally, although certain circumstances can justify an unequal distribution.
Generally, assets acquired during the marriage are presumed to be marital unless they are established as nonmarital. Certain assets acquired before the marriage, received individually as an inheritance or gift from someone other than your spouse, or protected by a valid written agreement may instead be considered nonmarital.
These rules can apply to checking and savings accounts, retirement funds, pensions, investments, and other financial assets.
So, rather than asking only whose name is on this account, you may also need to ask:
When was the money acquired? Where did it come from? And what happened to it during the marriage?
Once you understand that basic rule, the differences between the types of accounts become much more important.
Joint Checking and Savings Accounts
Joint accounts create a particularly practical problem during divorce: both spouses may have access to the money. That can be scary when a relationship is ending.
You may log into your banking app one morning and wonder, What is stopping my spouse from taking all of this? Should I withdraw my half before they do?
Draining the account first is not necessarily the answer.
Large withdrawals, unusual transfers, or significant spending around the time of a divorce may become relevant later. Florida law specifically allows courts to consider the intentional dissipation, waste, depletion, or destruction of marital assets when determining equitable distribution.
If you are worried that your spouse may empty an account or leave you without enough money for ordinary expenses, talk with your attorney before making a significant withdrawal or transfer. It is also a good idea to download recent statements while you still have access to the account.
Individual Checking and Savings Accounts
With an individual account, one of the biggest issues may be determining where the money came from.
Imagine you had $20,000 in savings before getting married. You kept the same account throughout your marriage, but over the next ten years you also deposited marital income into it, transferred money between it and joint accounts, and used some of it for marital expenses.
Now the history of that money matters.
Mixing marital and nonmarital funds is often referred to as commingling. Commingling does not necessarily mean that every dollar automatically becomes marital property, but it can make determining and proving which funds remain nonmarital much more complicated.
If you believe an account contains nonmarital money, older statements and other financial records showing where those funds originated may become especially important.
Retirement Accounts
Retirement accounts come with an additional complication: dividing one is not the same as dividing cash in a checking account.
Under Florida law, vested and nonvested retirement benefits accrued during the marriage are marital assets subject to equitable distribution. That includes benefits in retirement, pension, profit-sharing, annuity, deferred compensation, and certain insurance plans.
If you began participating in a retirement plan before the marriage, however, the account may contain both marital and nonmarital interests.
Once the marital portion has been determined, the process for dividing it depends on the type of retirement plan. Certain employer-sponsored plans may require a Qualified Domestic Relations Order (QDRO) to direct the plan administrator to distribute benefits to a former spouse.
Retirement accounts can also come with tax rules and potential penalties, making it especially important not to simply withdraw or transfer retirement funds without understanding the consequences.
Investment and Brokerage Accounts
Investment accounts introduce another issue: their value can change.
Unlike $10,000 sitting in a checking account, a portfolio of stocks, mutual funds, or other investments may rise or fall in value while a divorce is pending.
There may also be tax considerations associated with selling certain investments. As a result, the balance displayed on an investment account does not necessarily tell the entire financial story.
If investment accounts are involved in your divorce, it can be important to understand not only the account's current value, but also what investments it contains, when they were acquired, and whether selling or transferring them could have additional financial consequences.
Should I Move Money Before Filing for Divorce?
Knowing that your spouse may have access to marital money can create a strong temptation to act first. But divorce should not become a race to empty accounts.
There is a difference between making sure you have access to money for reasonable expenses and intentionally withdrawing, transferring, spending, or hiding marital assets in an effort to keep them away from your spouse.
What Should I Do Right Now?
You do not need to know exactly how every account will eventually be divided to start preparing.
Gather statements for your checking and savings accounts, retirement plans, pensions, and investments. Take note of current balances and any recent significant transactions. If you believe you have money that should remain nonmarital, look for older records showing when you acquired it and where it came from.
Most importantly, before closing accounts, withdrawing large amounts of money, or making significant transfers, talk with your attorney about your specific situation.
If you are thinking about divorce in Florida, we can help you find out whether we are the right fit. Call us at 850-362-7228, or complete the form on our website and we will call you.
Written by Sophia Thephasdin. Reviewed for legal accuracy by Matthew Ausley, Attorney.