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Should I protect my money with a separate bank account?

Property division in a divorce is a bit more complex than many people understand. This is why there is a misunderstanding that by having separate bank accounts, you can protect your money in a divorce. 

CNBC explains that property division does not work that way because the court considers separate property based on when you obtained the property, not by whose name the property is in. 

Separate and marital property

To understand property division, you must understand how the court determines marital and separate property. The general rule is that anything you obtain or own prior to the marriage is your separate property. Anything you obtain during the marriage is marital property. 

There are exceptions. For example, inheritances are usually separate property regardless of when you receive them. These exceptions usually depend on whether you commingle the property with marital property, which would result in it all becoming marital property. 

Separate finances

Even if you keep your finances separate, you earned or obtained the money in the account during your marriage. Under the law, that makes your earnings marital property. You could show proof of the money in the account that you had prior to the marriage. The court may deem that portion of the account as separate property, but typically, having a separate bank account means nothing to the court when dividing property. 

There is one situation where a separate bank account may be beneficial. If you receive an inheritance or a gift, which is also typically always separate property, that is monetary in nature, you could put that in a separate account to ensure it does not commingle with marital property and become marital property.