Strategic Financial Moves In Your Divorce

Your Key To Financial Clarity

Initiating a divorce and navigating the immediate repercussions means you’re bombarded with countless decisions. When weighing up how to tackle these financial matters prior to your New York divorce fully wrapping up, you may wonder whether you should open up new bank accounts and lines of credit.

It can be sensible to open new accounts, such as credit cards in your name, before filing for divorce. Keep in mind, however, that it isn’t necessary that you do. The rationale here would be to establish clear distinctions between pre-commencement and post-commencement assets and debts once the divorce proceedings begin.

Allow me to illustrate a little more plainly. Let’s say you had a checking account or a credit card account during your marriage – even if only your name was on it, not your spouse’s. When you file for divorce, you want all the associated debt and assets to be considered as post-commencement. However, there could be complications. For instance, if you continue to use a joint account or credit card during the divorce process, opposing counsel might argue that the funds or debts incurred post-commencement are still marital assets.

A recent case I had comes to mind. In it, my client deposited their income into a bank account while still married. After they filed for divorce, which ended up dragging out for years, they used funds from this account to make a down payment on a second house. Despite the clear separation in timing between the divorce filing and the house purchase, the opposing counsel argued that the funds were commingled, making it challenging to discern whether they were marital or separate assets.

While I firmly believe this argument is flawed because of the clarity of the New York statute on the matter, that is, the provisions that freeze assets at the time of divorce filing, it’s wise to avoid these issues altogether. Depositing your income into a separate account ensures commingling doesn’t happen whatsoever and that funds are clearly recognizable as post-commencement. On top of this, separate accounts can shield your finances from potential misuse or debt accumulation by the other party, which isn’t entirely uncommon.

Accepting Money From Others

Accepting money from family or friends during your divorce process should not automatically be considered joint funds that your spouse can claim. Generally, any money or assets acquired after the filing of the divorce case are considered separate funds.

However, to avoid any potential complications or arguments from the opposing side, (especially if the amount is significant), I recommend setting up a completely separate account for the received funds. Whether it’s an inheritance, a gift, or any other form of financial assistance, segregating the money in a separate account ensures clarity and avoids confusion surrounding categorizing the funds as commingled.

Another consideration is how accepting funds from family or friends might impact your divorce case, particularly if it affects your employment status. For instance, if you quit your job or accept a lower-paying job and rely on financial support from relatives, your spouse may argue that this support should be considered as part of your income for purposes such as child support.

I’ve represented a father who either quit his job or was fired and was supported by his parents afterward. This had many implications for the subsequent case, particularly with the child support case that followed. The mother argued that the financial support provided by his parents should be considered as his income, and quite frankly, it’s the same exact argument that I would have made if I were representing her.

Before you accept any substantial financial assistance, it’s important you consult with an attorney. They can provide guidance on the potential impact on your case and advise on the best course of action to protect your interests.

For more information on Financial Matters Prior To A New York Divorce, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (914) 362-3080 today.