I tried to use my debit card to pay my bills and it was declined. When I called the bank, I found out that all of my accounts were frozen because my soon-to-be ex-spouse is listed. I really wasn’t expecting this. I received an ATRO from the court. What is it and how will it continue to affect my life?
Filing for the divorce can often result in unexpected consequences. What would you do if you tried to pay your electric bill or buy groceries and your bank card was declined? Even if there’s money in your account, it could be impossible for you to remove money during a divorce.
Courts Can Freeze Bank Accounts and Other Marital Assets
In a divorce, a court can freeze bank accounts and other marital assets. This is generally done by use of a court order that stops you or your soon to be ex-spouse from accessing any money or forbidding the sale or destruction of other marital assets. Although it can be highly inconvenient, this actually plays a very important piece in a high net worth divorce. It helps the court ensure that the assets are not squandered so that they may be appropriately divided during the divorce process.
What Type of Assets Are Typically Frozen?
Generally, when people read or see the word “assets,” they think about furniture, cars, homes, and other clearly tangible items. Yet, those aren’t the only marital assets. Marital assets can include insurance policies, bank accounts, and even items, property, or money left to either you or your former spouse via will.
How Are Assets Frozen?
When a divorce action is filed, the court may immediately issue an Automatic Temporary Restraining Order (ATRO). The ATRO:
- Prevents either party from selling, transferring, or putting a loan against marital property. This is one way that the court helps ensure that property, especially property that may be disputed between the parties, from magically disappearing.
- Stops the borrowing against or selling of insurance policies that one spouse holds for another. For instance, if your former spouse has a $25,000 whole life policy that has a $5,000 cash value and you are the insured (and they are the beneficiary), they are not allowed to cash out the policy and cancel it.
- Stops either party from changing beneficiaries on life insurance, health insurance, retirement accounts, and even wills.
- Stops either party from making changes to bank accounts. For instance, if you and your former spouse have a joint account, they are not able to remove you (nor are you able to remove them).
- Prevents either party from destroying or attempting to hide assets.
How Does an ATRO Benefit Parties in a High Net Worth Divorce?
Although it may seem that an ATRO is extremely inconvenient, it is actually quite beneficial to parties in a high net worth divorce case. For instance, in many high net worth divorce cases one of the spouses is a homemaker. One party generally held more power over all of the assets (including money) throughout the duration of the marriage. Even if the homemaker had ample access to assets and money during the marriage, divorce makes people do things they may not normally do. That includes trying to keep the other party of the divorce from getting access to money and other assets that they may have a legal right to receive. So, you can look at an ATRO as a protective mechanism the court provides for both parties.
The other main benefit to an ATRO is to help reduce costs of bringing in professionals to track down assets. Freezing assets in a high net worth divorce can help minimize expense by leaving things ‘as-is.’ This creates a financial snapshot that attorneys and accountants can use to help the parties wade through the divorce process. In short, an ATRO makes it easier and less expensive to obtain the big financial picture of the high net worth couple.
Are ATROs Always Issued?
In many instances an ATRO is automatically issued by a court. However, they may not be always issued. It’s important to protect your interest in the marital assets by talking with an experienced high net worth attorney.
If you are involved in a divorce in Pennsylvania or New Jersey, it is important to note that an ATRO will not be automatically issued. However, you or the other party may request for it to be done.
ATROs Can Be Modified
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, an attorney can help you get a modification approved for the ATRO. ATRO modifications can be done. This generally happens if both spouses agree to the modification and the court approves it.
Questions About Frozen Assets?
If you have questions about frozen assets, ATROs, or anything related to a high net worth divorce, contact Petrelli Previtera. We are matrimonial trial attorneys who provides services for high net worth divorce cases in both Pennsylvania and New Jersey. Know your rights. Contact Petrelli Previtera to schedule your consultation. Call us now: 215-523-6900.