What Will Happen if I Empty My Bank Account Before a Divorce?
The answer is: It depends. Family property is identified, valued, and shared between spouses in a separation and divorce.
The kind of bank account you empty could have an adverse result when going through a separation and divorce process.
If the bank account is a joint bank account, meaning both spouses’ names are on it, that’s considered family property. If one spouse owned the account before the marriage, never added the other spouse’s name to the account, but uses it for things like contributing to the joint mortgage or paying household bills, it could still be considered family property. It’s possible that the spouse who owned that account would be required to pay the other spouse half of the amount it contained before it was emptied.
Another factor to consider is that it’s not just assets that are divided in divorce but debts are also taken into consideration to calculate the net value of family property. So, if one spouse takes the entirety of a bank account, the bills will still need to be paid and credit may be given to the spouse who has taken on that responsibility.
What Is Family Property?
In general (although there are a few exceptions known as exempt assets), any property owned by either spouse or both spouses at the end of the marriage is considered family property. That includes but isn’t limited to:
- Bank accounts
- Retirement and investment accounts
- Real estate along with household contents (including items that are found in sheds, garages, or barns, such as tools and lawn care machinery)
- Antiques, jewelry, works of art, and other items that have financial value
- Business interests
- Life insurance policies (if they have a cash surrender value at the time of the divorce)
As noted above, the divorcing couple is also expected to share in the repayment of debts, including mortgages, taxes, credit cards, and other debts.
Are There Times When a Bank Account Would Be Considered Separate Property and Not Subject to Division?
There are some situations in which one spouse would own the bank account and have it recognized as separate property.
One spouse had the account before the marriage, did not add the spouse to it once married, and never used the funds in that account for things that benefited both spouses (mortgage payments, groceries, etc.).
A prenuptial agreement was drawn up before the marriage that specified certain financial items would remain separate property, such as inheritance or gifts, real estate not used by the other spouse (if it’s one spouse’s investment, for example), or life insurance proceeds.
In Saskatchewan, proceeds from a personal injury settlement are also considered exempt from family property division.
Determining what is and isn’t family property can be complicated and difficult. It’s best to work with experienced family lawyers who can elaborate on what the law will consider family property and what the law may agree is separate. Bank accounts are particularly complex to designate as separate or family property. That’s another reason not to empty an account without seeking legal advice.
What Is the Process for Dividing Assets and Debts During Divorce?
It may vary from case to case, but usually, there are a series of steps that need to be completed.
Draw up a list of all assets (everything from bank accounts to real estate to jewelry and household items) and whether or not they may be considered family propertyl or separate, along with a complete list of outstanding debts.
Assign a financial value to each item. In some cases, this can involve bringing in an expert, such as a Realtor for real estate or a jewelry appraiser for jewels.
Provide a corresponding list of which items should go to which spouse.
Do the math and figure out the net amount of the assets by also subtracting debts each spouse will have.
If one spouse or the other has a significantly higher portion of assets than the other, the goal is to make it more balanced and equitable. For example, if one spouse is going to keep the family house, the other spouse may receive more of other types of assets to balance it out.
What if the Spouses Can’t Come to an Agreement on the Value of the Assets or How to DIvide Them?
This is not uncommon and can be a source of stress and heightened emotions. Our recommendation is not to try to plow through a contentious process on your own. There is another way, and it’s a process that could be not only less stressful but potentially could take less time: Mediation.
Mediation involves having an impartial third-party mediator who doesn’t take sides. Their job isn’t to promote one view of the division of assets over the other. Instead, their job is to listen and help each side understand what the other means and wants. It can be a more straightforward way to help a couple work through negotiation and compromise with less anger. But it will likely work better if one spouse hasn’t emptied the bank account first!
What Should I Do if I Need Help With a Divorce?
Call Panko Collaborative Law & Mediation at 306-518-8107 for a consultation. We understand how frustrating the divorce process can feel and that you want to get through it as quickly as possible. As family law lawyers, one of our focus areas is helping people have a more collaborative, holistic approach to divorce, which can help emotions stay calmer and heads clearer. We also have the option to provide mediation, which is another avenue for working through divorce issues more cooperatively.