According to the Virginia Department of Health (VDH), there were 29,465 divorces and annulments in Virginia in 2013. During the divorce process, a couple usually has a variety of assets that must be divided, and the courts categorize these assets into three types: separate, marital, or hybrid. When dividing bank accounts, property, and assets, the court considers individual and joint contributions, proceeds from joint efforts in business, and inheritances to determine ownership.
Understanding How Virginia Divides Property and Assets During a Divorce
Virginia considers marriage an economic partnership and operates under the system of equitable distribution, meaning the courts strive to divide property fairly, which does not always mean equally. A first step in the division of assets is categorizing them into the following three classes:
- Separate Assets. Property is considered separate if only one spouse can claim individual legal ownership over the asset and earned it with singular effort. Additionally, property and assets acquired before the marriage or by inheritance—which haven’t been comingled with marital property—count as separate and will be distributed as such. For example, if one spouse enters the marriage with an individual bank account and never used those funds for household expenses or deposited any of her husband’s money into it, that account and its dividends would be deemed separate property.
- Marital Assets. Property and assets acquired under joint ownership qualify as marital property. Consequently, all bank accounts to which both spouses contributed—even if the account is only under one name—are subject to careful division and tracing of funds by the courts. When one spouse enters into the marriage with separate property, but comingles it with the wealth of the other spouse, those assets become marital property.
- Hybrid Assets. Virginia defines hybrid property as assets that are both part marital and part separate. For example, one spouse might have inherited a business before the marriage, but during the marriage, both spouses put in effort to earn money for and increase the value of the business. Virginia courts would rule the business as hybrid property.
Important Factors in the Division of Bank Accounts
When dividing bank accounts during a divorce, the name on the bank account does not determine individual or joint ownership. Courts look at methods and sources of contributions to the accounts to determine whether their funds are marital, separate, or hybrid. Typically, a judge will consider the following factors when dividing bank accounts equitably:
- Income. If the couple opens a joint checking account after the marriage, but only one spouse has contributed income to that account and used it for personal expenses during the life of the marriage, that account will likely be categorized as separate property. Conversely, an account owned under only one name but funded with shared money would be considered marital property. Likewise, if both parties in the marriage share one checking account for their direct deposits, household bills, and payments toward shared debts, that account would be labeled marital property.
- Inheritances. If one spouse inherits money before the marriage, but then contributes those funds to a jointly owned account used by both spouses for household or joint expenses, the courts would likely consider that inheritance money marital property—since it was comingled over time with shared assets and became indistinguishable as separate property.
- Effort. If a spouse entered the marriage as a sole business owner, and both spouses exerted effort toward the success of the business during the life of the marriage, Virginia courts will likely consider any appreciation in the value of the business and the money earned as a result of those joint efforts to be marital property. It’s possible during this process that one spouse can prove a higher percentage of effort and contribution, thereby securing a larger portion of those funds in the division of the business’s bank account.
Types of Bank Accounts Eligible for Division
Separate, marital, and hybrid property can include anything acquired before or during the marriage such as houses, cars, businesses, retirement accounts, and bank accounts. When dividing bank accounts, it’s important to give your attorney available statements and paperwork for all accounts owned separately and jointly to assist with distribution. The following are types of bank accounts you can expect to come under consideration for division during the divorce process:
- Checking accounts
- Savings accounts
- Certificate of deposit (CD)
- Money market accounts
- Business accounts
Get the Divorce Help You Need
The divorce process can sometimes be confusing and frustrating. If you have questions about dividing your assets or other financial details of your divorce case, we can help you. Kearney, Freeman, Fogarty, & Joshi have been providing quality legal services for over three decades, and we can assist with your needs, too. Contact us by starting a live chat through our website.