When people start thinking about divorce, one of the first questions is what happens to the money. Can I keep my own account? Should I take half of our joint savings before I file? Can I freeze the account? The answers in Massachusetts are often different from what people expect.
Separate accounts aren’t automatically yours
Many couples keep their finances separate and assume each spouse will leave the marriage with their own account. Massachusetts doesn’t work that way. Under G.L. c. 208, § 34, a judge may assign to either spouse “all or any part of the estate of the other.” Everything either spouse owns is potentially on the table, no matter whose name is on the account and however the money got there.
The division is equitable, which means fair, not necessarily equal. In deciding what’s fair, the judge must consider factors including the length of the marriage, each spouse’s conduct, age, health, station, occupation, income, vocational skills, employability, assets, liabilities and needs, each spouse’s opportunity to acquire future assets and income, any alimony, and the needs of the children. The judge may also consider each spouse’s contribution to acquiring, preserving or increasing the value of their assets, including contributions as a homemaker.
An example
Suppose one spouse stayed home with three children for ten years while the other worked. The working spouse put half of each paycheck into a joint account for bills, gave the at-home spouse 10 percent for an individual account, and saved the rest in an account in their own name. Whose money is the savings? A judge could treat all three accounts as one pool and divide it equally, recognizing the at-home spouse’s contribution to the household. Other outcomes are possible, depending on the facts, the length of the marriage and how each side presents the case.
Individual accounts and joint accounts
- Individual accounts. Only the person named on an account has the right to withdraw from it. Having the password because you pay the family bills doesn’t give you the right to take money from your spouse’s individual account, and doing so can cause serious problems in the case. But the money in that account can still be divided by the court.
- Joint accounts. A judge will readily see money in a joint account as part of the marital estate. Either owner can usually withdraw from it under the bank’s rules, but the court will expect an accounting of what was taken and why.
The automatic restraining order
Once a complaint for divorce or separate support is filed, Supplemental Probate and Family Court Rule 411 automatically applies to both spouses. It takes effect for the spouse who files as soon as the complaint is filed, and for the other spouse when they are served. It stays in place until judgment unless the spouses agree otherwise in writing or the court changes it. Under the order, neither spouse may:
- Sell, transfer, encumber, conceal, assign, remove or dispose of any property belonging to either of them, except for reasonable living expenses, the ordinary course of business or investing, reasonable attorney’s fees and costs for the case, by written agreement, or by court order
- Take on debt that would burden the other spouse’s credit, such as borrowing against a home equity line or running up credit cards or cash advances
- Change the beneficiary of a life insurance policy or a pension or retirement account without the other spouse’s written consent or a court order
- Remove the other spouse or the children from existing medical, dental, life, auto or disability insurance
A spouse who needs the order changed can ask the court on short notice.
Should I take money out before I file?
This is one of the hardest practical questions in divorce, especially when you’re worried that a spouse with a gambling, drug or spending problem will drain the accounts. There’s no single right answer, but here’s what to weigh:
- Taking half isn’t a safe harbor. Because the division is equitable, not automatically equal, withdrawing 50 percent doesn’t mean you’ve taken your share. You’ll have to explain to the judge what you took and what you did with it. If the spending doesn’t fit reasonable living expenses, attorney’s fees or another legitimate purpose, the court can require you to pay it back or offset it against your share.
- Taking what you need to live on is more defensible. Many people withdraw a reasonable amount to cover basic expenses for a reasonable period, knowing the restraining order will soon restrict both spouses. Judges don’t look kindly on a spouse who empties an account and disappears.
- Freezing an account rarely works. Some banks require both owners to agree to a freeze. A bank that lets one owner freeze a joint account may let the other owner lift the freeze just as easily.
- Document everything now. Print or download recent statements for every account you know about, and note the balances on the day you separate or file.
If you have a real concern about dissipation, talk to a lawyer before you move money. The court can enter specific orders to protect assets when the automatic order isn’t enough.
Disclosure: the court will see the statements
Hiding or quietly moving money rarely works. Under Rule 410, within 45 days after the summons is served, each spouse must give the other statements for the past three years for every bank account held in either spouse’s name, individually or jointly, or held for either spouse’s benefit or for the children. The same rule covers investment and retirement accounts, recent tax returns, pay stubs, and loan or mortgage applications. Each spouse also files a sworn financial statement under Rule 401.
Getting advice early
Decisions made in the weeks before and after filing can shape the whole case. If you’re thinking about divorce and aren’t sure how to handle bank accounts or other assets, call 978-273-8337 or contact our office.
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About the Author
Richard Alan Gaudet, Esq. is a Massachusetts attorney at the Law Offices of Richard Alan Gaudet, LLC in Middleton, Massachusetts, who advises clients on divorce, property division, custody and support. His practice focuses on professional license defense, business law and litigation, family law, and landlord representation, serving clients across Northern, Eastern, and Central Massachusetts. Reach him at 978-273-8337 or rgaudet@gaudetlawoffice.com. Office: 35 Village Rd., Ste 100, Middleton, MA 01949.
ABOUT THIS ARTICLE
This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.
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