Today, you tried to use your debit card for a normal purchase, but your payment was declined. You called the bank and found out your accounts are frozen. Is this scenario an effect of dissolving your marriage? Chances are, it is. Frozen assets during divorce are not uncommon.
Why Courts Freeze Bank Accounts During Divorce
The court has the power to freeze your bank accounts and other marital assets when you’re in the middle of a divorce. We’re not just talking about the house, cars, and furniture. Marital assets can include insurance policies, bank accounts, inheritances, and more. It might be inconvenient, but this action helps the court ensure your assets do not change and are appropriately divided.
How the Court Freezes Assets
When a couple files for divorce, the court may immediately issue an Automatic Temporary Restraining Order (ATRO). Although “restraining order” is in its name, an ATRO during divorce has nothing to do with abuse. Instead, it does the following:
- Prevents either party from selling, transferring, or putting a loan against marital property
- Stops the borrowing against or selling of insurance policies that one spouse holds for another
- Prevents either party from changing beneficiaries on life insurance, health insurance, retirement accounts, and wills
- Stops either party from making changes to bank accounts
- Prevents either party from destroying or attempting to hide assets
An ATRO is particularly useful in high net worth divorce cases. One party might have held more power over all of the assets throughout the duration of the marriage. In this scenario, an ATRO is a protective mechanism to ensure one spouse does not prevent the other from accessing assets.
Freezing assets can also help minimize expenses by leaving things ‘as-is,’ thus reducing the costs of tracking down assets. An ATRO creates a financial snapshot that attorneys and accountants can use to wade through the division of property.
In some instances, the court will automatically issue an ATRO. In others, one of the two divorcing spouses will need to request the order. Not all couples may have an ATRO during their divorce. It’s best to have a conversation with your attorney about the benefits of frozen assets during divorce.
Modifying the Order
If you’re involved in a high net worth divorce and find that you don’t have the funds that you need to maintain your monthly bills, a divorce attorney can help you get a modification approved for the ATRO. Modifications can generally happen if both spouses agree to the modification and the court approves it.
If you have questions about frozen assets during divorce, feel free to contact our firm.