What Can I Do to Prepare Financially for Divorce?

The question, “what can I do to prepare for divorce?” is a very common question for people to ask prior to divorce. On the top of most people’s mind when contemplating divorce is wondering how they will survive financially and what will happen to any money that the couples have accumulated during their marriage.

Divorce, like marriage, is a journey – a long journey. Divorce can take close to two years to come to judgment in a Massachusetts court in contested divorce cases. I advise clients to protect themselves as much as possible, emotionally, and financially.

Joint or Individual Bank Account?

We Keep Our Bank Accounts Separate!

When couples keep their finances in individual accounts, that is, wife has money in one account and husband in another separate account, things can appear to each party as if their finances are not a concern for the court. After all, these types of divorce filers believe, the couple has spent the entirety of their pre-marriage life and married life with just such an arrangement. However, in Massachusetts divorce cases, the court looks at a couple’s finances and attempts to divide them equitably.

The concept of equitable division, explained in further detail in MGL Chapter 208, Section 34, is applied by judges in most divorce cases where the judge must intercede in the proceeding. This Massachusetts law allows the judge to consider (as applied to dividing property) the length of the marriage, age of the parties, health of the parties, station in life, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs of each party, any opportunity to acquire future assets and income, and the amount and duration of alimony.

What equitable division practically boils down to is the idea that it is the judge that is the ultimate arbiter of who gets what in a Massachusetts divorce. Therefore, simply having separate bank accounts will not be the deciding factor in determining which party gets what out of the divorce. So, practically speaking, having separate bank accounts may not protect either party in a divorce in Massachusetts.

We Have Joint Bank Account(s)

Where a couple decides to pool all income into one or several bank accounts and use that money to pay bills, that couple is under the same legal considerations given to married couples who separate their money during the marriage. That is, the concept of equitable division of the estate is front and center in the judge’s mind. In a Massachusetts divorce, a judge will apply the principles of equitable division to fairly divide the assets of the couple largely irrespective of whether assets are held in single or joint bank accounts.

What to do with Bank Accounts in a Massachusetts Divorce

What if you have a legitimate concern that your spouse will blow through the money you both have worked hard for the moment you file for divorce? Or perhaps your spouse has a severe gambling problem, is addicted to drugs, or otherwise has some behavior that jeopardizes your financial situation. Shouldn’t you freeze your bank accounts in these situations?

Well, the bottom line about divorce in Massachusetts is application of something called the automatic stay, spelled out in Rule 411 of the Probate and Family Court. The automatic stay does the following:

• Prevents either spouse from selling, transferring, encumbering, concealing, assigning, removing or disposing of any property belonging to either party except:
  • As required for reasonable expenses of living
  • In the ordinary and usual course of business
  • In the ordinary and usual course of investing
  • For payment of reasonable attorney’s fees or costs related to the divorce
  • By written agreement of the parties to the divorce; or
  • By order of the court
• Prevents either party from incurring debts that would burden the credit of the other party, including but not limited to borrowing against a credit line on the marital residence or creating unreasonable credit card or cash advances against credit or bank cards.
• Changing the beneficiary on a life insurance policy, pension or retirement plan, or similar investment account unless consented to (in writing) by the other party or under court order
• Prevents removing the other party or their minor children from coverage under an insurance policy whether medical, dental, life, automobile, or disability insurances.

So, back to a very real-life problem…that of the gambling or drug addicted spouse…what do you do? From a legal perspective this problem is very difficult to answer in a direct manner because doing nothing might cause one set of problems and doing something may cause another.

For example, let’s suppose you are quite sure that your husband will wipe out the bank account the moment you file for divorce. Do you pull half of the money out in anticipation of his behavior so that you have something to live on? Or, do you wait for him to wipe out the account and then bring this all up in court?

It may seem as though the obvious answer to the above question is to pull half of your money out of the account or freeze the account. However, if you pull half the money out of the account you are going to have to explain to the court what you did with the money, and if the explanation does not fit into the category of allowable expenditures, you will likely have to pay some portion of the money back to your spouse.

If you decide to put a freeze on your account, consider this…some banks require both account holders to agree to freeze the bank account (so that option is out). If the bank allows a single owner of a joint bank account to freeze the account without the consent of the other holder, it is equally likely that that same bank will allow one account holder to lift the freeze on the account – putting you in the position you were in before you decided to freeze the account.

So, What is My Best Option?

It is the automatic stay which applies as a byproduct of filing for divorce, under Massachusetts Divorce law, that provides in most cases the best protection. Essentially, most clients will choose to withdraw enough money to reasonably cover basic expenses for a reasonable time period understanding that their spouse will be under the watchful eye of the court for the same behavior. Generally speaking, judges are not fans of one spouse who decides to withdraw a huge chunk of money disappear. A spouse who does so, does so at his or her own risk.

If you find yourself in a situation where you are contemplating divorce and have assets (either money or other property) that you are unsure of how to handle, contact our offices at 978-273-8337. Attorney Gaudet specializes in providing detailed solutions and explanations of the law tailored to your individual circumstances.

DISCLAIMER: The information provided in the pages and posts of this website are for general informational purposes only. The information presented on this site is not legal advice, and no attorney-client relationship is formed by the use of this site.