Most experts recommend that anyone facing a separation or divorce in South Carolina take action early on to separate finances from their soon-to-be-former spouse. Doing so reduces the chance that you could be found liable for charges and enables you to protect your money from suddenly disappearing. So what's the best way to handle joint bank accounts during divorce?
Benefits to closing joint accounts
Those who have gone through a divorce, particularly those who have been through especially nasty ones, often recommend closing all joint accounts as soon possible after you realize that a separation or divorce is imminent. These accounts may include joint checking accounts, savings accounts, investment accounts, credit cards, lines of credit, or really anything listed in both parties' names. Doing this can help separate your money and your financial obligations from those of your spouse and can help protect you from being on the hook should he or she go on a spending spree.
Can you even close a joint account on your own?
The short answer is that yes, you can close joint bank accounts on your own unless the Family Court has issued an Order prohibiting you from doing so. Joint bank account are owned by both parties equally, meaning any person whose name is on the account has the full authority to make changes to that account, including closing the account and withdrawing all of the funds in it, without first clearing it with the other person. However, as you will read below, there might be serious and significant drawbacks to doing so.
Drawbacks to closing joint accounts
If there are so many good reasons to close joint accounts, why would you ever hesitate to do so? Sometimes, the Family Court may require the parties to maintain the status quo while the case is pending, which would prohibit either spouse from closing any joint accounts. Of course, these types of decisions are very fact specific, and there is no “one size fits all” answer to how such cases are handled.
Be aware that absent a Court Order prohibiting it, either spouse may close any joint account, which can lead to several problems. For instance, what if one spouse closes a joint account, takes all of the funds in it, and sets up a new account solely in his or her name, thus freezing the other party out and effectively leaving them penniless? What if one spouse closes certain joint credit cards?
These steps might benefit that spouse on a very short term basis, but it almost always comes back to haunt them. Judges do not look kindly on such actions, particularly if they harm the other spouse or leaves them in a precarious financial situation – especially if there are children involved. Before you close any accounts, be sure to discuss these issues fully with your South Carolina family law attorney.
Source: “Your 22-Step Checklist to a Financially Sound Post-Divorce Life,” published atDailyFinance.com.