Chapter 6 Closing the Books: What Do We Do with Joint Property?

• Library: Divorce & Money (Nolo) (2020 Ed.)

CHAPTER 6: Closing the Books: What Do We Do With Joint Property?

Joint Account Checklist

Credit Cards

Equity Credit Lines

Joint Checking, Savings, and Other Deposit Accounts

Joint Title to Property

Joint Investments and Other Holdings

Safe-Deposit Boxes

Shared Property and Special Collections

Questions to Ask an Attorney

Your spouse may not want to ruin you—but his or her actions can still leave you at risk.

When you and your spouse are in the midst of splitting up, you come face to face with a hard fact we've stated before: When you are connected to another person financially, you are at risk. Does that mean you need to rush out in a panic and close all your joint accounts? Not necessarily—it is never wise to act in panic, and very few spouses deliberately destroy each other financially. But even if your spouse doesn't purposely ruin your financial life, you can end up vulnerable as a result of your spouse's actions.

One way to gauge how much financial damage your spouse could inflict is to measure the level of hostility between you. For example, if you're no longer on speaking terms—or you speak only about the children—you will probably want to act quickly to separate your financial lives.

Even if your divorce is "friendly," don't count on that goodwill to determine what you should do about joint accounts. Look at your situation objectively. Apply your own common sense and instincts. You should be moving toward eliminating the financial obligations you share with the person you are divorcing. Because income is often reduced—and expenses increased—by a divorce, it may not be possible to cut all connections. Nevertheless, you can still reduce your risks.

Joint Account Checklist

The material that follows should alert you to common trouble spots.

Credit Cards

Before closing joint credit card accounts, be sure you have established credit in your own name, based on your own income. A department store, for instance, may open an individual account for you when you close a joint one. You may be tempted to include your ex-spouse's income when applying for separate credit. Don't do it. Because you won't be able to use your ex's income to repay your bills, it would border on fraud.

If you don't qualify for credit based on your income, you can apply for a secured credit card. Many banks will give you a credit card if you secure it by opening a savings account. Your credit limit equals a percentage of the amount you deposit into your account. Depending on the bank, you'll be required to deposit as little as a few hundred dollars or as much as a few thousand. Many secured credit cards have a conversion option. This option lets you convert the secured card into a regular credit card (one not tied to a savings account) after a certain time period, if you use the card responsibly.

To find the names of banks issuing secured credit cards, call local banks or check the Internet. A website that lists and evaluates available credit cards is www.bankrate.com. Whatever you do, don't call a "900" or even an "800" number service that claims "instant credit—no questions asked."

Once you have established your own credit, write simple letters to close any jointly held credit cards or revolving loan accounts. Even if a credit card account hasn't been used for years, close it to prevent your ex-spouse from using it in the future without your authorization. Such letters may not fully protect you from obligation for your spouse's later-incurred debts, but they put the burden on the creditors to take action.

Your credit reports should give you all the information you need to complete the letter suggested below. (See Chapter 5 for information on how to get a copy of your credit report.) Call the lender (a toll-free number is usually on your statement) to confirm the address. Then fill in the creditor's name and address, your account number, your Social Security number, and your signature. Send all letters to creditors by certified mail, return receipt requested, and keep copies for your files.

Sample Letter for Closing Joint Accounts

[Date]

To:

Re: Account number __________

Card member __________ [your name]

Social Security number __________

Dear __________:

This letter is to inform your company that the above-referenced account is to be closed, effective immediately. At this time, my (husband/wife), [name of spouse], and I are seeking a divorce.

I am requesting a "hard close" of the account so that neither party may incur new...