Should Married Couples Maintain Separate Bank Accounts?

As a divorce attorney, professional mediator, and Certified Divorce Financial Analyst, we get this question often. In most cases, particularly in community property states, separate accounts don't really matter.

But why?

Unless you have a prenuptial agreement in place to dictate otherwise, generally speaking any income you make after you are married is joint. Let's image you had a separate account when you got married and you kept it in your name alone after marriage. The problem is, if you add any community money, such as income after you are married, to the account it can become "commingled" or "transmutate" into community property. Think of this image - you are at a carnival and see one of the tubes where you stand and a fan blows money all around you. What you catch - you get to keep. Now image there is money on the floor when you walk in - i.e. money that you had in your account prior to marriage - and then once the fan turns on more money is thrown in the top - i.e. money you make while you are married. Once the fan turns off - you can't tell the difference between what money was there before and what was added after. This is the concept of commingling funds.

The only way to keep it clearly defined is to not add any community funds to a separate account. For instance, you own a rental property before you get a married and have a business account associated with in. The rental property remains your separate property (you don't add your spouse to title or the mortgage). Any income or expenses for the property go in and out of the separate business account. You never add any income from your job (i.e. income other than rental income from the property) or any marital funds to the business account. Now, arguably, this account is separate because ti hasn't touched marital funds. It is important to note that even if you keep your finances "separate" while you are married, without a prenup the court can assume they are joint because you are married.

While this is pretty clear in community property states, equitable division states may vary on their perspective of separate accounts - while many states view it in a similar manner as described above.

This highlights the importance of a prenuptial (premarital) agreement, also known as a prenup. A prenuptial agreement protects your separate property in case of divorce in the future. Remember that if you are married, you have a prenup in one way or another - either your divorce is dictated by state law or by your own agreements (prenuptial agreement). If you are getting married, consider a prenup as a potential option to protect both you and your fiance.