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Are separate bank accounts enough financial protection for you money in a divorce?

A 2018 Bank of America (BOA) survey shed light on the growing trend for spouses to keep separate bank accounts instead of having a joint one.

Husbands and wives often do this because they believe that their spouse can’t stake a claim to the funds if they divorce by doing this. It’s not uncommon for spouses to feel blindsided once they realize that maintaining separate accounts didn’t accomplish their goals.

How often do spouses maintain separate banking accounts?

Researchers working on the BOA study discovered how at least 28% of millennials hadn’t yet joined their bank accounts with their spouses’. The researchers found that at least double the amount GenXers and baby boomers shared joint accounts with their spouses than did millennials. 

The majority of the respondents who BOA interviewed were committed to keeping their finances separate for the foreseeable future as they feared losing all they’d saved if they divorced. Many admitted to watching the same happen with their parents when they divorced. 

What are the misconceptions about property division in a divorce?

Many divorcing couples have a flawed perception of how property division works. They think that their spouse won’t be able to lay claim to their funds if they place them in an account in their name alone. This same misconception often motivates spouses to list only one of their names on the house’s deed. Neither one of these methods are effective at keeping their assets entirely separate from their marital assets, however. 

In reality, Illinois law says that everything a couple earns or acquires after their marriage is marital property — regardless of whether the assets or cash are solely in one spouse’s name. Only assets that were owned prior to the marriage, inherited or subject to a premarital (or postmarital) agreement are generally able to be carved out.

What steps can you take to minimize your financial losses in a divorce?

Maintaining separate bank accounts isn’t enough to protect your assets in a divorce. You can, however, rely on the fact that the law in this state tries to make all divisions of assets equitable, not necessarily equal. If a divorce is imminent, an attorney can help you stake your claim to what you are fairly due.