Can I Empty My Bank Account Before Divorce?

Can I Empty My Bank Account Before Divorce?
You can safely empty your bank account before divorce so long as:

  1. It says so in a prenuptial agreement.
  2. It is regarded as “separate property” by the state, irrespective of the property distribution principle it follows (community property distribution or equitable distribution).

If (1) and (2) above do not apply, you should not clean out your bank account before divorce. Now, you can clean out your bank account if neither (1) nor (2) apply, but you take a serious risk of upsetting your judge when a divorce is filed. You don’t want that. Here is a detailed explanation that clarifies the terms above and simplifies the topic:

Terms of the Prenuptial Agreement

If you have a prenuptial agreement, you simply have to follow the terms laid down in the agreement regarding the distribution of marital property. If it allows, you may empty your bank account. Remember, such an agreement takes precedence over the state’s marital property distribution laws. Also, note that a prenuptial agreement cannot contain stipulations about child support, child health insurance, and childcare costs.

However, if you don’t have a prenuptial agreement, then property distribution is governed by the marital property division principles followed by the state in which you are filing for divorce.

There are two types of property distribution rules that states follow under divorce laws: (1) Community Property Distribution and (2) Equitable Property Distribution.

Community Property Distribution

States that follow the Community Property Distribution principle define community property as assets acquired or earned by the couple, as well as debts owed by them, during the marriage. Accumulation of community property starts immediately after marriage and ends when the couple physically separates without intending to continue with their marriage.

Community property includes money earned by either spouse during the marriage, assets bought by monies earned by either spouse during the marriage, and separate property that is mixed/co-mingled with community property, also during the marriage.

Any asset that is acquired before marriage (which is not co-mingled) or after separation is considered as “separate property” belonging to the original owner. It includes assets owned by a spouse before the marriage, assets given or gifted to just one spouse either before or during the marriage, and assets inherited by just one spouse at any time.

Community property is to be distributed 50/50 when divorce happens. A spouse cannot transfer or alienate community property without the other spouse’s permission. They can only manage their own 50%.

Separate property can only be managed by the original owner.

Equitable Property Distribution

States that follow the equitable property distribution rule allocate the property and debt fairly and equitably (not necessarily on a 50/50 basis, but 50/50 is the general rule). The courts consider the marriage duration, property value, contribution of each spouse towards the marital property, non-monetary contributions like homemaking, childcare, and supporting the earning spouse, health/age of each spouse, income sources of each spouse, and the economic condition of each spouse if a division of marital property were to occur before splitting the marital property

According to this principle, a spouse who earns significantly less money than the other spouse or whose economic condition after the distribution of assets is foreseen to be much poorer than the other spouse and can be awarded a higher proportion of the property.

The courts classify the property owned by a spouse before marriage and gift/inheritances received by one spouse during the marriage as separate property. These belong to the original owner and are not subject to equitable distribution during divorce.

Also, under this principle, some states identify marriages as long-term or short-term. Typically, a court allows 50/50 distribution of marital property in a long-term marriage, while in a short-term marriage the court sets the clock back to pre-marriage time and then distributes marital property based on an equitable and fair basis. For example, in Utah, a marriage whose duration has exceeded 10 years is considered a long-term marriage. Marriages that last only a few years may be considered short-term.

Continuing with Utah’s example, the state follows the equitable property distribution rule, and therefore, any distribution of marital property depends on a host of factors explained above. Note that in Utah, even when both the spouses agree on dividing the marital property during mediation, the judge gets to decide if the agreement is fair and equitable. If he decides it isn’t, the court may require a trial, and at the end of trial, order an equitable distribution of property.

To sum up, you can clean up the bank account before divorce:

  1. If it says so in the prenuptial agreement.
  2. If there is no prenuptial agreement or if the agreement is silent on the issue, you can still withdraw the funds so long the bank account is classified as your “separate property.”
  3. Under any other circumstances, you can, but should not, withdraw all the funds.
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About the Author: Marco Brown
Marco C. Brown was named Utah’s Outstanding Family Law Lawyer of the Year in 2015. He graduated with distinction from the University of Nebraska College of Law in 2007 and is currently the managing partner of Brown Family Law, LLC.
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