California is a community property state, meaning that the name on a bank account does not define who the money belongs to. Income and debt incurred during the marriage belong to both parties. This changes at the date of separation.
A couple’s relationship during the divorce process ranges from congenial and respectful to highly contentious. The ability of the couple to work together often mirrors how they handle their accounts, both joint and separate. Some couples continue to share a joint bank account throughout the divorce process, others end up in court to ensure one of the parties has access to money to cover basic living expenses.
Couples who are using a process that makes decisions outside the courts, such as mediation or collaboration, have a great deal of flexibility on the terms of their settlement agreements. These more congenial couples will frequently pick a date and then divide their cash accounts 50/50. As a CDFA, I advise people to make sure they have access to some cash during the divorce and as part of the settlement agreement as an emergency fund.
The stickiest situations I have seen occur when one party hides money or moves money around before the divorce, making it difficult to properly identify all of the community and separate assets. California mandates financial disclosure, so money hide-and-seek is illegal and can result in significant consequences in court.
A spouse who does not have an individual bank account can open a checking or savings account, but it may be difficult to get a credit card. While I do not encourage accumulation of credit card debt, it can be difficult to manage day to day living without a credit card. So, if you don’t have one, get one!
No matter what your relationship, the size of your bank account, or your employment status you will need money to live on and pay legal expenses during the separation period. Working out the financial details to divide your money doesn’t happen overnight, so make sure you have some cash available to cover expenses. If you and your soon to be ex-spouse cannot work it out amongst yourselves use an attorney or divorce financial planner to help you.