Quick Answer
In most cases, you can continue to spend your own separate money as you wish during a divorce. However, there are some limitations on large purchases or transfers to avoid hiding assets. Consult with your divorce attorney before making major financial decisions.
Can I spend my income during divorce?
Yes, in general you can continue to spend your regular income from employment or other sources as you normally would during a divorce. However, it is best to avoid any unnecessary large purchases or expenditures.
Your income earned after separation is considered your own separate property. The key factors are:
- The money must be earned after the date of separation.
- The money must come from your own employment or business, not from joint marital assets.
- You should deposit the money into your own individual bank account.
As long as the money meets these criteria, you can spend it as you wish. However, frivolous spending could be frowned upon by the judge dividing assets. Keep records of your income and spending.
What if I received a bonus or commission?
Bonuses and commissions earned after separation are generally considered your own separate money. However, if the compensation was based on work performed during the marriage, your spouse may argue it is a marital asset to be divided. Be prepared to show records proving when the money was earned.
For recurring bonuses tied to your overall annual performance, the bonus may need to be prorated between the marriage and separation timeframes. The portion earned during marriage could be deemed a joint asset for division.
Can I spend money I had saved separately?
Money you had saved or invested before marriage and kept separated during marriage is considered your own individual property in a divorce. The key factors are:
- The money must have been kept in accounts in your own name, not joint marital accounts.
- You must be able to trace the money back to before marriage, gifts, inheritance, or other separate sources.
- The money should not have been commingled excessively with marital funds.
As long as you can show the money originated from separate sources and was kept separate, you can spend it as you wish during the divorce process.
What if I receive an inheritance or gift?
Inheritances and gifts received by one spouse during the marriage are generally considered that spouse’s separate property. This remains true during the divorce process as long as you keep the inherited or gifted assets separated.
The key factors are:
- Inherited or gifted money should be deposited into your own individual account, not a joint account.
- If you receive physical inherited or gifted property, do not add your spouse’s name.
- Avoid commingling inherited or gifted money with joint marital funds.
As long as you can trace the money or property back to an inheritance or gift, you can spend it or use it as you want during divorce.
When can’t I spend money freely?
There are some limitations on when and how you can spend money during divorce:
- You cannot spend or take sole ownership of joint marital property. Marital property will be divided.
- You cannot spend community property in a way that would harm the interest of your spouse.
- Making large purchases or luxury items may be frowned upon by judges.
- Depleting bank accounts substantially may be seen as hiding money from division.
- Using marital property as collateral without agreement is not allowed.
In general, avoid large transfers of property or cash that would affect the overall marital estate. Consult your attorney before making major purchases.
Can I transfer money to friends or family?
Be very careful about transferring money to friends or family members during a divorce. Large gifts or transfers without consideration could be construed as attempts to hide assets from marital property division.
However, you generally can continue to provide typical gift amounts for birthdays, holidays, etc. Transfers that are consistent with your past gifting history are less likely to be questioned.
Transfers using separate property money are more likely to be allowed than transfers using marital property or joint accounts. Consult your divorce attorney before giving away substantial amounts.
What happens if I disregard restrictions?
If you disregard legal restrictions and spend marital funds inappropriately during divorce, the court can impose a variety of penalties:
- Require you to return or repay money improperly spent.
- Add the amounts back into calculations for property division.
- Give a larger share of marital property to your spouse.
- Hold you in contempt of court if violations are willful.
- Award attorney fees to your spouse for legal costs.
In extreme cases, improper spending could be considered financial fraud. This may result in additional legal consequences.
How can I keep spending transparent?
To avoid disputes over your spending during divorce, follow these best practices:
- Keep marital and separate funds strictly separated.
- Maintain detailed records of accounts and transactions.
- Discuss large purchases openly with your spouse when possible.
- Be upfront and transparent with your divorce attorney.
- Provide requested records promptly during disclosure.
- Follow court rules and attorney advice about spending limits.
Keeping your spending reasonable and transparent will show good faith. This helps the divorce and property division process go more smoothly.
Should I create a temporary budget?
Creating a temporary living budget is usually a good idea during divorce. This helps you:
- Organize spending and pay regular bills.
- Continue standard household expenses.
- Identify areas you can reduce spending.
- Avoid unnecessary spending or purchases.
- Plan for changes after separation.
The budget gives you a framework for managing your money properly during the divorce process. It can also provide documentation if questions arise later about your spending.
Conclusion
In general, you can continue to spend your own separate income and property as you wish during a divorce. However, you must avoid improper use of marital assets or joint funds. It is best to be conservative with expenditures and keep clear records. Consult frequently with your attorney about allowable spending and provide transparency to your spouse. This helps prevent disputes over money during a difficult time. With proper planning, you can manage your finances independently while the divorce proceeds.