Joint Accounts

Joint accounts can become a pressure point in any divorce action.  As a matter of New York law, if spouses hold money in a joint account, each spouse is presumed to hold a one-half interest in the account.  The last thing a spouse wants to find out is that the other spouse has emptied the joint account and is seeking a divorce.  Money that had been the property of one spouse can wind up paying a retainer to the other spouse’s attorney.

While at the commencement of a marriage, neither party is thinking ahead to a divorce, but until the relationship is more settled, it is prudent to keep separate property separate so that the worst case scenario does not become a reality.

  And, of course, either spouse, as a co-owner of the account, can empty it at will.  As noted above, under New York law, when spouses hold property in a joint account, a rebuttable presumption arises that each spouse has a one-half interest in the account.  This presumption may be rebutted by evidence that the account was titled jointly as a matter of convenience, without the intention of creating a beneficial interest, and that the funds in the account originated solely in the separate property of the spouse who claims separate interest. Chamberlain v. Chamberlain, 24 A.D.3d 589 (2d Dep’t 2005).  Separate property can include personal injury proceeds, funds acquired before the marriage and funds gifted from family members.  The question before the Court now is why did you put those funds into a joint account?  The presumption is: you wanted your wife to have those funds.  The exception is: you did it for other reasons.

In Chamberlain, the defendant collected proceeds from his personal injury action and put the money into a joint investment account.  He overcame the presumption by establishing that he was the sole beneficiary of the funds, that he was the only one who managed the investments, and that the plaintiff had no involvement with the account.  The Court decided that one withdrawal which the plaintiff made at the defendant’s direction was not sufficient involvement to transform the separate property into marital property and held that the money belonged to defendant. 

The Chamberlain rule, however, is not the norm, and you should carefully consider whether it is prudent to potentially transform separate property into marital property by placing it into a joint account.