Most married couples in California will accumulate community property, unless they have a valid premarital agreement that sets forth an alternative arrangement. The presumption in California is that all real or personal property acquired during the marriage, meaning from the date of marriage to the date of separation, is community property.

Community assets will be divided at dissolution, while property acquired before marriage or after separation is presumptively separate property and is not subject to division at dissolution. Understanding how an asset is characterized as community property or separate property is therefore key to understanding how your bank accounts will be divided upon divorce.

It has become more common these days for spouses to have separate bank accounts, held in only their name. Sometimes, a party had the account before marriage, or other times, the account was opened by a party during marriage, but solely in their own name.

In either case, are the funds in a spouse’s bank account that is held in their sole name separate property, and therefore not subject to division upon dissolution, or are the funds community? The answer is -- it depends on the source of the funds.

Many people think that if they if have a bank account with only their name on it, the money in the bank account belongs only to them. People often think, “Well that is my bank account, I earned that money, so of course it is all mine!” However, that is not the case pursuant to California law. Remember, unless there is a pre-marital or post-marital agreement in place, property acquired during the time of marriage until the date of separation is community property.

If the source of the money on deposit is money earned during the marriage, then that money is likely community – regardless of the name on the account. Thus, if a spouse opened a new bank account during the marriage, the money he/she deposited into the account is likely all community property, and subject to division if they get divorced.

But what if someone opened their bank account prior to marriage and they already had money in it? In that case, the source of the funds was separate earnings, acquired prior to marriage, and would be confirmed as separate property (assuming it could be traced back to the time before marriage!).

If someone were to continue to deposit funds into that same account during the marriage (i.e., their paychecks), then they have what is considered a “commingled” bank account. In other words, that bank account has both separate property (the money in their account that they earned prior to marriage) and community property (the money put in the account during the marriage). In that situation, the separate property funds must be traced back to their separate property source to be confirmed to that party, while the funds that were deposited during the marriage are community.

Money acquired during the marriage can also be separate property. Some examples include gifts or inheritance, or the profits of separate property assets. However, generally speaking, regular income earned during the marriage is considered community.

Ultimately, opening a bank account during marriage in your sole name is not going to be sufficient to prevent the funds in that account from being subject to division upon dissolution. If a couple wants the money that they deposit into their own accounts to be excluded from division, they should consider obtaining a pre-martial or post-marital agreement.

What Happens To My Bank Account When I Get Divorced?