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End joint bank accounts and credit cards with the marriage

by | Jul 27, 2017 | Property Division

Over the years of marriage, couples in New Jersey amass a good deal of assets, some of which are very valuable. While of course some assets, such as the family home, are tangible, there are other, less tangible assets, such as bank accounts. However, bank accounts can be a very valuable asset that a couple jointly owns during the marriage. Therefore, spouses in New Jersey going through the property division process should consider how their joint bank accounts are closed.

Two or more people can share a joint checking or savings account. Either spouse can independently deposit or withdraw funds from these accounts or close them.

To avoid any dispute or misunderstanding about the accounts’ assets, both spouses should close these accounts together. Additionally, spouses should first agree to the separation of its funds, because the account’s contents belong to both spouses. Agreement on division also helps avoid these disputes.

In addition to closing bank accounts, couples seeking a divorce may also need to close a joint credit card account. Before closing a joint credit card account, any remaining balances should be resolved. If there is an outstanding debt, the financial institution will hold both spouses responsible for the debt and impede closure of the account.

Creditors can also pursue payment from either spouse regardless of which person acquired the debt. A spouse who never used the account may also be held liable for paying any debt.

Even though resolving this debt is difficult during divorce, opening another individual balance account may help pay it off. Each spouse can open an account and transfer part of the debt to it. Then, the joint account should be closed when it has a zero balance.

Any automatic payments should be cancelled before closure of a joint account. This helps prevent more bank fees for any payments that are posted after the account’s closing.

Deposits should also be handled carefully. A bank may reopen a closed account and charge service fees if it later receives a deposit.

Before closing these accounts, however, spouses should try to agree on division of the couple’s assets and liabilities. Property should be classified as assets acquired during the marriage, which may be divided, or non-marital property that remains with the spouse. An attorney can help a spouse with these issues and reach a fair property settlement or decree in a divorce.

Source: Bankrate, “Breaking up? How to close a joint account,” Adams Hartung, July 17, 2017