We're sorry to hear about Nicole's pending divorce. Sadly she's
got plenty of company. According the CDC (Center for Disease Control) there were
approximately 1.1 million divorces in 2004.
Nicole is right to be concerned about her finances as she goes
through the divorce process. Just as money is often the source of marital
problems, it often causes headaches during the separation and after a divorce
has been finalized. Even couples that have made an effort to keep their finances
separate will probably find some areas where their financial affairs have become
The simple answer to Nicole's question is "yes" her Nearly-Ex
can make major withdrawals from a joint checking account.
In a joint bank account, either person can withdraw all of the
money. Regardless of any agreements between the parties. That's true even if it
were Nicole's account before they were married, she's made every deposit and her
Nearly-Ex was added to the account merely for convenience. Even if her Nearly-Ex
puts it in writing, he still can go down to the bank and take every cent. Either
before or after the divorce.
A joint account is only good for people who completely trust
each other. Usually that's not the case in the middle of a divorce.
What can Nicole do? One solution would be for each of them to
write a check for one half of each household bill. More work? Sure, but a whole
Nicole really needs to look beyond their checking account. Joint
debts can become a real problem. The lender will look for payment from anyone
listed on a debt. The same thing is true for mortgage payments and credit card
accounts. If both of them are on the loan, the lender can go after either of
them for repayment. For the entire loan. Regardless of what Nicole and Nearly-Ex
agreed during the divorce.
And just because the court orders her Ex to make payments
doesn't guarantee that he won't lose a job and fall behind. If she's still on
the loan, the lender will start calling asking her for payment. Any missed
payments will reflect on her credit score. Short of making the payments herself,
there's really not much she can do but plead with her Ex to catch up.
Any loan or credit card that has both Nicole and her Nearly-Ex
listed should be closed out or refinanced by one or the other. That might not be
easy. For instance, the bank won't think that a loan to one of them is as safe a
loan to both. The reason is simple. Now the lender only has one possible source
of payment. Not two. Because of that the lender may want a higher interest rate.
Nicole and Nearly-Ex should also retitle any jointly owned
property. Owning joint assets with your Ex can be troublesome. Even if the
divorce was friendly. Joint ownership creates both privileges and
responsibilities that aren't shared very well by divorced people.
For instance, both parties must agree to sell any joint
property. Nicole wouldn't be happy if a year from now her Ex refused to sign off
when she wanted to sell her car. But if both names are on the title, she'll need
both signatures to sell it.
Once all that's completed, Nicole will also want to check her
other financial documents and make the appropriate updates. Her Ex might be
listed as the beneficiary of her life insurance and IRA. Nicole will also need
an updated will. Don't forget bank safe deposit boxes or auto and home insurance
Is that a lot of work? Sure it is. But just like divorce means
separating a lot of possessions and memories, it also means separating your
Gary Foreman is the editor of The Dollar
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