Last Updated on: 15th October 2023, 08:55 am

Can Assets Bought During Marriage Be Sold to Pay for a Divorce Lawyer?

Divorce can be an emotionally and financially difficult process. One common question that arises is whether assets accumulated during the marriage can be sold to pay for a divorce lawyer. The short answer is – it depends on the laws of your state and the specific circumstances of your situation. This article will provide an overview of some key considerations when selling marital assets to pay legal fees during a divorce.

What are Marital Assets?

Marital assets generally refer to any property acquired during the marriage. This includes things like the marital home, vehicles, investment accounts, retirement accounts, and personal property. The exact definition varies by state. Some states consider all assets acquired during marriage to be marital property regardless of how they are titled. Other states exclude separate property gifts and inheritances.

Marital debts, like credit cards and mortgages taken out during the marriage, are also typically divided in divorce. The division of assets and debts depends on whether you live in an “equitable distribution” or “community property” state[5].

Using Marital Assets to Pay Legal Fees

In most states, you are allowed to use marital assets like bank accounts and investments to pay reasonable divorce-related legal fees[3]. This applies to both spouses, not just the one who files first. There is usually an exception under the automatic restraining order rules that prevents selling assets during divorce[4].

However, it is wise to be reasonable and fair when using marital funds to pay lawyers. Using all or most of the available cash to pay your lawyer when your spouse cannot afford one could be seen as financial abuse by the court[1]. The judge may order you to reimburse your spouse for their legal fees later.

If you need access to funds to pay your lawyer that your spouse controls, you can request temporary orders from the court for legal fee payments. The court can allocate marital funds for each spouse’s lawyer fees if one spouse has control of most of the cash.

Stopping the Sale of Assets in Divorce

Once one spouse files for divorce, automatic restraining orders (AROs) often prevent selling or transferring assets without agreement[2]. This is meant to maintain the financial status quo during divorce. However, reasonable spending is still allowed.

If you are concerned about your spouse selling assets once you file for divorce, here are some steps to consider:

• File for divorce first – The ARO preventing selling assets is activated once one spouse files and serves the other with divorce papers. Filing first protects assets.
• Track accounts – Monitor bank accounts, investment accounts, and property records to watch for sales or transfers.
• Change passwords – Change online account passwords so only you can access accounts.
• Alert third parties – Contact banks, brokers, insurance companies to prevent unauthorized sales by your spouse.
• Get a court order – Ask the court to freeze assets or require both signatures for sales. Violating a court order can lead to contempt charges.
• Notify buyers – Contact any potential buyers of property and let them know of the divorce. Most will delay sales until the divorce is finalized.
• Talk to your lawyer – An attorney can help you take appropriate legal steps to protect assets.

How Courts Value Assets Sold During Divorce

If your spouse does sell or transfer assets without your consent after filing for divorce, the court has remedies to ensure an equitable division of marital property[4].

• The court can award the sold asset fully to your spouse, while you get an equivalent asset.
• The sale price may be discounted if the asset was sold below fair market value.
• Proceeds from sales can be traced and divided. Gifted assets may be “clawed back”.
• Penalties like more favorable property division and legal fee reimbursement may apply.
• In extreme cases, criminal charges for fraud may be possible if sales were concealed.

The bottom line is that while your spouse can technically sell assets once you file for divorce, the courts have tools to ensure a fair overall division in the end. An experienced divorce lawyer can help protect your rights.

How to Divide Assets Fairly

Ideally, couples should aim for an amicable settlement and equal division of marital assets and debts. Here are some tips:

• Communicate – Even in contentious divorces, some communication about finances is wise. Silence can increase suspicion.
• Be transparent – Share records so each spouse understands the full marital financial picture. Deception causes problems.
• Get valuations – Appraise real estate, businesses, collectibles so you can divide equivalently.
• Divide categories – Split asset types between spouses instead of each asset. For example, each could get a car and retirement account.
• Buy-out spouse – If keeping certain assets, pay your spouse their share of the value.
• Offset – If you keep the house, your spouse could get the retirement account to offset the value.
• Sell and split proceeds – Liquidating assets to split cash may be needed if ownerships and values are complex.
• Mediate – A mediator can help you equitably divide assets if you get stuck.

Alternatives to Selling Assets for Legal Fees

If possible, try to avoid selling assets to pay legal fees during divorce. Here are some options to consider first:

• Use personal separate savings not commingled with marital assets.
• Borrow from family or friends.
• Get a personal loan from your bank.
• Ask your lawyer about payment plans or credit options.
• See if you qualify for pro bono or low-cost legal aid.
• Represent yourself in court if assets are minimal.
• Negotiate with your spouse to use marital funds for both lawyers.
• Request legal fee payments from the court.

Consult an Attorney

Dividing marital assets equitably while funding legal fees can be challenging. Every divorce has unique circumstances legally and financially. Sit down with an experienced local divorce attorney to understand your options and protect your rights. An attorney can help you navigate this process smoothly and advise you on the laws in your jurisdiction. With proper guidance, you can achieve a fair settlement and move on with your life after divorce.