It seems to make a lot of sense for spouses to share a joint bank account. They're most likely shouldering up under the same financial responsibilities, so it's logical to pool money in a single account and use it to pay marital bills. The arrangement doesn't come without risk, however, particularly if your marriage heads south.
A Joint Account Means Equal Ownership
Whether you and your spouse share a joint account or you open one with someone else – such as a friend, adult child or other family member – the rules are the same. Both holders of the account have the same right to the money in it. These rights are not limited to 50 percent or what might seem like each's rightful share, but the entire balance. In most cases, your spouse can wipe out the joint account and the bank has no legal right or responsibility to stop her. However, some exceptions exist. If you set up the account with additional protections against one account-holder cleaning out the balance, your bank must honor those terms.
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Check your account agreement with the bank. If you hold it as Mary Smith or Joe Smith – the pivotal word being “or” – Mary is typically free to take all the money without Joe’s consent or signature. But if the account is titled as Mary Smith and Joe Smith, withdraws usually require the signatures of both spouses.
If You're Headed for Divorce
Joint ownership of an account may not pose a problem if you and your spouse are happily married and you're on the same page when it comes to money management and budgeting. If you're not, and she empties the "Mary or Joe" account without your consent, you have no recourse with the bank. If you're in the process of getting a divorce, however, this changes things.
Divorce laws vary significantly from state to state, but marital assets usually are divided close to 50-50 when spouses part ways. This effectively means that if you're going to file for divorce, half the money in the joint account is rightfully yours, according to the law firm of Zelenitz, Shapiro and D'Agostino in New York. Your spouse can't take this half because divorce law supersedes the rules banks must operate under for joint accounts. If she does, you can make a claim for reimbursement as part of your divorce proceedings.
Automatic temporary restraining orders, also known as ATROs, go into effect in some states as soon as one spouse files for divorce. An ATRO prohibits either of you from tinkering with marital assets or making any substantive changes to assets until your divorce is final and a judge can decide who gets what. Check with a lawyer or legal aid to find out if your state recognizes ATROs if you or your spouse has filed for divorce, or look over your divorce papers – the order should be included.
Even if you live in a state that imposes restraining orders, you or your spouse may be able to take half the account before filing for divorce, and sometimes all of the account if the other spouse has control of a lot of assets the other can’t reach. Her half of these assets would offset your half of the bank account when marital property is divided. However, this usually is prohibited after one of you has filed for divorce and it’s not the rule everywhere, so check with a local lawyer before you act.
A Few Options
- If divorce isn't an option for you yet but you want to protect yourself, change your joint account to a "Mary and Joe" designation, or otherwise set up rules with the bank to require both signatures for withdrawal. You may need your spouse's cooperation for this, however.
- If you haven't already signed up for Internet access to your bank account, do so. This won't stop your spouse from taking the money if your account is held by "Mary or Joe," but at least you'll know immediately if she withdrawals the balance. You might be able to prevent an avalanche of returned checks and overdraft fees.
- Put just enough money in the joint account to meet household bills. If there's anything extra in your paycheck, stash that money in an account in your sole name.
- Bankrate: Risks of Joint Bank Accounts
- The People’s Law Library of Maryland: Personal Bank Accounts
- Zelenitz, Shapiro & D’Agostino: My Spouse Cleaned Out Our Joint Checking Account to Keep Me From Filing for Divorce. What Do I Do Now?
- Forbes: Divorcing Women -- When Can You Withdraw Funds From Joint Accounts?