One of the first things people do when preparing for divorce in Missouri is to review their resources. Married couples generally need to divide their shared property but can potentially protect their separate property from division in a divorce.
Many Missouri residents misunderstand what makes an asset marital property or separate property. Frequently, people attempt to claim financial accounts as separate property as they prepare for divorce. Someone with a 401(k) related to their job might claim that the account is their separate property. After all, they started funding it before they got married, and their spouse’s name is not on the account.
Contrary to what people often assume, the name of an account holder is not the most important consideration when addressing financial accounts during a divorce.
The timing of deposits is what matters the most
Simply maintaining separate financial accounts does not keep the resources of spouses separate during marriage. There is a presumption that any assets acquired by either spouse and any income earned during the marriage belong to both spouses. Therefore, a retirement account, savings account, checking account or investment fund held by only one spouse may still be at least partially at risk of division during a divorce.
A review of what deposits occurred during the marriage can give someone a better idea of how much of the account is their separate property and how much is marital property that they may have to divide with their spouse. Even those who start a new account as they prepare for divorce typically need to disclose that account and the value of its contents during the divorce process.
Similar rules apply to debts. Cash advances, credit cards and even student loans in the name of one spouse can still be part of the marital estate for the purpose of property division. The awareness of each spouse of those financial obligations and the intent behind acquiring them, as well as the date when someone took on the debt, can all influence whether or not an account is part of the marital estate.
In some cases, spouses who do not fully disclose their holdings to each other and the courts could be at risk of penalties for hiding assets during the discovery process. For this reason and a host of others, understanding when financial resources are separate property and when they are marital property may benefit those preparing for an upcoming Missouri divorce.