Spending assets before a divorce

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Q. I’m thinking of getting a divorce. My wife’s name is on the account we use as an emergency fund, and the rest of the accounts are in both our names – except for retirement. I’ll need some cash to get my own place. Can I do anything with the emergency fund money without her knowing? Or do I have to sell stocks to raise cash?
— Thinking

A. You can use the funds in the emergency fund or funds from any other account you can legally access.

Until a Complaint for Divorce is filed, it is the state’s position that you are happily married and therefore you are free to conduct yourself in any legal way, said Ken White, a certified matrimonial attorney with Shane and White in Edison.

“In reality, absent an order being entered by the court directing that your assets are to be preserved, you are free to act as you deem fit with your assets,” White said.

This is the case whether both of your names are on the account or not, he said, as long as you have access to the funds without committing a crime.

While you are free to use your assets in anyway, you should keep in mind that you may ultimately be held accountable to make your spouse whole, White said.

“For example, all assets as well as liabilities amassed during your marriage are presumed to be subject to equitable distribution,” White said. “Therefore, all money saved between the date you are married and the date a Complaint for Divorce is filed is likely a ‘marital’ asset subject to equitable distribution.”

White said when such assets are equitably distributed, they’re routinely divided 50/50, absent exceptional circumstances.

Accordingly, if the week before a Complaint for Divorce is filed there exists $20,000 in a joint bank account — perhaps an emergency fund — and one spouse liquidates that account and takes all $20,000, that spouse will probably have to reimburse $10,000 to the other spouse as part of finalizing the divorce.

If you’re serious about filing for divorce, White recommends you consult with an experienced family law attorney.

“Once your spouse sees that you have liquidated the emergency fund — if you elect to — it is possible that matters will escalate quickly,” he said. “Therefore, you want to be prepared for what may come next.”

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This post was first published in June 2016.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.