I have had several cases during my time as a Divorce Solicitor where I have had to advise clients in relation to joint accounts. Usually, I find there are two scenarios:
- Where one party has removed funds from the joint account without the other person’s knowledge or consent or they have in fact drained the account entirely and run up a debt.
- Where one party wants advice on how much they should remove from the joint account
Upon separation, it is very important to take some initial advice from a solicitor. Whilst communication between spouses can be helpful and agreeing how you are going to manage your financial affairs in the interim can save time, a lot of trust is placed in your soon to be ex-spouse hands and not everyone will deal with matters fairly. Unfortunately, when emotions are running high, especially in relation to finances, not all spouses will act reasonably.
So, what can you do?
The starting point in relation to a joint account is that both parties each have an equal right to the funds in the account. Clients tend to think that this means that they can only each have 50% of what’s in the joint account but actually, it extends to the entirety of the funds. Either of the parties therefore can empty the account, regardless of who deposited it and legally they are entitled to do so and the bank or building society where the money is held, is not able to provide the other party with any relief.
The money taken by the spouse is still an asset and this type of behaviour can be viewed by the court as conduct. If it is then recklessly spent then it can be added back into the computation, just as long as you are able to demonstrate there has been wanton dissipation. If the money is still in the spouses’ bank account then this will be an asset that will be included in the financial settlement. The Court does have a range of different powers when dealing with how assets are to be distributed, including providing a lump sum.
The only time where the removal of the funds could become a cause of concern is where the money is the only asset or the asset is of significant value and the other assets would not compensate the other spouse. This type of situation may warrant a Freezing Injunction which preserves the asset pending financial settlement. To obtain a freezing injunction, you would have to satisfy the court of the following:
- That the course of action is justifiable in England and Wales
- You have a good arguable case
- The existence of the asset against which the Freezing Injunction can bite
- There is a real risk that those assets would be dissipated so as to defeat your claim
- That it is just and convenient to grant the Injunction.
A Freezing Injunction is not appropriate in every case and just because someone has behaved unreasonably does not mean that a Freezing Injunction should be obtained. Advice should be sought from a specialist family solicitor to discuss whether your case warrants emergency action.
Proactive steps - what can you do to protect your assets?
Upon separation from your spouse, you should consider how best to limit any future liability. The following tips may be of assistance:
- If you have a joint account, you should make it a joint signature account, where neither of you can withdraw monies without the other’s written consent or, (this will depend on the bank and/or building society and whether they offer this service). You could also consider freezing the account by contacting your bank or building society which would ensure that no monies are removed. This is not always ideal especially if this is going to have an impact on direct debits leaving the account and the family home bills being met.
- If you have a credit card in your name, where your partner has the secondary card, then you should consider cancelling the secondary card to ensure that no debt is run up in your name. Whilst you can argue that the debt is matrimonial in nature and should be included in any financial settlement, the reality is that whilst discussions are ongoing to try to settle the finances, you will still have debt attributed to your name which will need to be repaid. This can increase your monthly minimum payments, increase interest and legally, from the bank’s perspective, this debt is yours and yours alone and if this isn’t repaid then they will pursue you for the payment, not your spouse.
- You should check to see whether or not any property that you hold with your spouse is held as joint tenants or tenants in common and if it is held in the former and you no longer wish for your spouse to receive your share of the property if you were to die, then whilst they may still have a claim under the Inheritance Act against your estate, you can sever the tenancy for the property and prepare a Will.
- You should attempt to have fruitful discussions with one another regarding the interim arrangements for payment of any mortgage and utilities and if you are no longer residing in the family home, then you may wish to have your name removed from the utilities as well as the Council Tax for the property. It is important that you consider whether your ex-partner does have a maintenance claim before taking any steps that could create any undue hardship towards them as this could lead to an application being made to the court and a costs order being made against you.
How we can help
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