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The matter of freezing assets during a divorce

On Behalf of | Dec 14, 2021 | Divorce |

A divorce might involve freezing financial assets during the proceedings. If both spouses hold joint accounts, either spouse may withdraw cash or sell stocks at will. Doing so could complicate the proceedings when the spouses are negotiating asset distributions, so the judge in the Michigan court might order the freezing of all or some assets.

Freezing assets in a divorce

Sometimes, financial disagreements factor heavily into whether the spouses decide to divorce. One spouse might be a profligate spender due to lavish lifestyle choices. A spouse with a gambling or substance abuse problem may put his or her troubling behaviors ahead of any fiscal restraint. The person might not worry about how the behavior affects the divorce proceedings.

To prevent financial chaos during divorce negotiations, one spouse may file a formal request with the court to freeze assets. Doing so involves seeking a temporary restraining order that addresses financial matters. A court order approving the freezing of assets would then go to all parties involved.

If a brokerage firm receives a copy of the approved court order, attempts to withdraw money may face a proverbial brick wall. The spouse seeking the court order might need to address his or her financial situation since withdrawing, selling or trading funds wouldn’t be possible upon freezing the assets.

Dealing with other financial concerns

A fiscally irresponsible spouse could take steps to circumvent the frozen funds, such as borrowing money from credit cards before the divorce proceedings end. The borrowing could hurt both spouses with joint accounts, so it is essential to make sure all relevant accounts end up frozen.

A spouse could also try to hide assets, creating other legal issues during the divorce. Hopefully, both spouses performed a thorough audit of all accounts to keep anyone from hiding anything.