As you navigate through your divorce, you may be concerned about your finances, specifically your joint finances. You may share bank accounts, credit cards, and investment accounts with your spouse, all of which will need to be divided and closed. Our San Francisco high asset divorce attorneys share how you can strive for financial independence.
Evaluating Shared Finances
When reviewing your finances for the division of property process, you should take note of the following:
- Bank accounts with joint access,
- Credit cards in both parties’ names, or credit cards with yourself or your spouse as an authorized user,
- Investment accounts in both parties’ names, and
- Any debt associated with these accounts.
Following the division of property process, these accounts will all be divided and need to be shut down so both parties cannot access the accounts.
Opening Your Own Bank Accounts
During your divorce, you should open up a new checking and savings account at a trusted bank. Doing so allows you to have your own separate checking or savings accounts. These new bank accounts can help you as you begin your path to financial independence and provide you with the accounts needed for when your bank accounts are split.
If you are unsure where to open your new bank accounts, you can look for trusted banks online or in your community with brick-and-mortar locations. While you can do all of your banking online, it can be convenient to have a physical location to visit if needed. If you like your current bank, you can request them to open a new checking or savings account without your spouse’s access.
Following the division of assets, you may be awarded a cash value from your joint bank accounts. When your portion of the assets is sent to you, you will need a bank account to receive the funds, which makes it especially important to have a private bank account available for the transaction.
Closing Joint Accounts
Following the distribution of your liquid assets, your joint bank accounts will need to be closed so neither party can access them. Contact your bank to request these accounts be closed and unable to be reopened.
If you share credit cards with your spouse and both are in each of your names, you should pay off the balance of debt as determined by the court and close the account. The closure of the account may harm your credit score in the short term; however, leaving them open can leave you liable to any debt your spouse may accumulate on the account or penalties on your credit for missed payments. Leaving these accounts open is worth more harm than good, so it is crucial to close any open lines of credit that you may share with your spouse.
If you have credit cards in which one party is claimed as an authorized user, contact your creditor and request they remove the authorized user from the card. You may need to be reissued new cards with new payment information to safeguard your accounts and limit potential spending by your spouse.
Bank Account Rewards
When you originally opened your bank accounts, you may have been drawn in by the bank’s rewards program and offerings. If you have rewards points or cashback from your credit cards, these points will be included in the division of property process and most likely split between both parties. When closing your credit accounts, remember to cash in on those points to avoid losing them in the closure.
Replacing Credit Cards
If you wish to replace the credit cards you closed, you may wish to begin reapplying for credit cards. Since opening too many credit cards in a short period of time can negatively impact your credit score, focus on what you find most valuable and apply for that card first. If you are focused on travel, opt for a travel credit card with your favorite hotel chain or airline. If you are more focused on day-to-day transactions, look for a credit card that rewards you for those purchases.
You can always reapply for your current credit cards; however, you may not be eligible for certain advertised opening bonuses if you opened your last card in a certain time period. If you do opt to replace your credit cards, take your time to avoid “credit card churning,” where accounts are opened and closed in a short period of time to earn rewards.
Effects on Your Credit Score
Since your divorce will not be listed on your credit report, your divorce itself will not harm your credit score. Closing your credit card will also not harm your credit score if it is done correctly. However, opening credit cards can cause a slight decrease in your credit score as a result of the inquiry on your accounts.
Helping You Reach Your Independence
Our high asset divorce attorneys at Fenchel Family Law PC are prepared to guide you through your high asset divorce, from filing to finalization. We understand that managing your finances following your divorce may be difficult, and our goal is to help you as you begin the next chapter of your life.
Schedule a consultation with our high asset divorce attorneys today by calling us at (415) 805-9069 or filling out our online contact form to learn more about we can help you on your path towards independence.