Separate bank accounts in a divorce: Things to keep in mind

Asset division is one of the most time-intensive and complicated parts of divorce. If you’re considering divorce in Louisiana and have separate bank accounts, it’s important to understand how state law treats those accounts. Many people assume money held in only one spouse’s name is protected, but that’s not always the case under Louisiana’s community property rules. A Lake Charles community property partition lawyer can help you understand how these rules may apply to your situation.

What does it mean to have separate bank accounts?

A joint bank account is held in both spouses’ names, whereas a separate account lists only one spouse’s name. These accounts may be used as each couple sees fit—some choose to treat all of their finances as separate affairs, while others combine their finances and use joint accounts exclusively. 

In many cases, couples will use separate accounts only for specific expenses and maintain joint accounts for the rest. Couples who choose to use separate accounts usually view the money in those accounts as separate personal property rather than shared marital assets. 

This arrangement may work fine during the marriage, but when these couples decide to part ways, they may be surprised to find out that the law doesn’t view it the same way. In Louisiana divorce cases, the label on the account matters far less than when and how the money was earned.

How do separate bank accounts work in Louisiana divorce cases?

In Louisiana, assets and debts acquired during the marriage are generally considered community property, regardless of how they’re titled or whether an account is held by only one spouse.

Community property, also called “marital property,” is subject to equal division during a divorce. This includes bank accounts held in one party’s sole name unless it qualifies as true separate property.

Separate property usually includes assets obtained before the marriage, acquired through gifts or inheritances, or purchased using qualified separate property.

How courts decide which bank accounts should be treated as community property

Courts look closely at when a bank account was opened and when the funds were earned to determine whether it should be treated as community property.

Account opened while legally married

If the separate account was opened while the couple was legally married, the money in it will be considered community property and subject to a 50/50 division. This applies even if only one spouse’s name is listed on the account and even if only one spouse ever had any involvement in using it. 

For example, earnings are considered community property, so even if a spouse puts their paycheck into an account in only their name, it doesn’t make the contents of the account separate property. Even when spouses keep separate bank accounts, income earned during the marriage is usually treated as marital property for purposes of property division.

Account opened before the marriage

On the other hand, if the separate account was opened before the marriage, it will usually be considered separate property. In this case, the spouse who opened the account will be entitled to keep all of its contents. However, this rule isn’t absolute. The court may occasionally choose to label this type of account either wholly or partially as community property if the other spouse contributed to it in some way during the marriage.

Are you required to disclose separate bank accounts?

Sometimes, a separate account holder may choose to keep the existence of one or more accounts secret from their spouse during the marriage. This could be because they want to indulge in certain habits without having to account for the expenses, or simply because they want to maintain complete control over their finances. 

While there’s nothing in the law prohibiting this type of behavior during the marriage, it must come to an end when it’s time to begin the divorce process. 

During a divorce in Louisiana, both spouses are required to disclose all assets. This includes separate bank accounts—even those that were opened before the marriage. Louisiana courts take asset disclosure seriously during divorce proceedings. If the court discovers a hidden account, it may choose to penalize the offending spouse by awarding a greater portion of assets to their former partner, among other penalties.

Things to keep in mind before entering a divorce with separate bank accounts

Having separate bank accounts does not guarantee that those funds will stay separate in a Louisiana divorce. Courts focus on when the money was earned, how it was used, and whether it became mixed with marital funds. Keep in mind that:

• Separate accounts aren’t automatically protected. Money earned during the marriage is often considered marital property, even if it’s deposited into an account held by only one spouse.
• How the money was used matters. Paying household expenses or joint debts from a separate account can blur the line between separate and community property.
• Settlement can offer more flexibility than court. When spouses reach an agreement outside of court, they may have more control over how bank accounts and other assets are divided.

Learn more from our skilled Lake Charles divorce attorneys

There are no guarantees when it comes to handling separate bank accounts in a divorce. Every case depends on the facts, including when the money was earned and whether the parties can reach an agreement outside of court. If you’re facing divorce and have questions about property division, the experienced legal team at The Johnson Firm can help. Call (337) 433-1414 or contact us online to discuss your situation.