Can Assets Be Frozen In A Divorce

When you’re going through a divorce, financial matters can become quite complex. One aspect that often arises is the freezing of assets. Imagine this scenario: you try to use your debit card for a normal purchase, but your payment is declined. You call the bank and find out that your accounts are frozen. Is this situation related to the dissolution of your marriage? Chances are, it is. Let’s delve into the details.

Why Courts Freeze Bank Accounts During Divorce

The court has the authority to freeze not only the obvious assets like the house, cars, and furniture but also other marital assets such as insurance policies, bank accounts, and inheritances. While it might be inconvenient, this action serves a purpose: ensuring that your assets remain unchanged and are appropriately divided during the divorce process.

How the Court Freezes Assets

When a couple files for divorce, the court may issue an Automatic Temporary Restraining Order (ATRO). Despite the term “restraining order,” an ATRO during divorce has nothing to do with abuse. Instead, it accomplishes the following:

Prevents Property Transactions: It stops either party from selling, transferring, or taking out a loan against marital property.
Protects Insurance Policies: An ATRO prevents borrowing against or selling insurance policies that one spouse holds for the other.
Maintains Beneficiaries: It stops either party from changing beneficiaries on life insurance, health insurance, retirement accounts, and wills.
Preserves Bank Accounts: Changes to bank accounts are prohibited.
Asset Preservation: It prevents either party from destroying or hiding assets.

An ATRO is particularly useful in high net worth divorce cases. If one spouse has held more control over the assets during the marriage, the ATRO ensures that the other spouse can still access them. Additionally, freezing assets minimizes expenses by leaving things as they are, reducing the costs associated with tracking down assets. Attorneys and accountants can use this financial snapshot to navigate the division of property.

Modifying the Order

In some cases, you might find yourself in a high net worth divorce where you lack the funds needed to cover monthly bills. If so, a divorce attorney can help you seek a modification to the ATRO. Modifications can occur if both spouses agree and the court approves the change.

Remember that not all divorcing couples have an ATRO in place. It’s essential to discuss the benefits of frozen assets during divorce with your attorney.

If you have any questions about frozen assets during divorce, feel free to contact our firm. We’re here to assist you during this challenging time1.