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Separate Money, Joint Account – Whose Is It?

In North Carolina, Equitable Distribution (ED) is how property is divided in divorce proceedings. ED can be a complicated process, and much of it relies on timelines and tracing funds. When people get married, a typical occurence is that separate bank accounts are converted to joint accounts. What happens in a divorce proceeding when one spouse claims that the account is not joint but still separate, despite the addition of the other spouse’s name?

Manes v. Harrison – Manes rebuts a presumption.

A previous landmark case in McLeod v. McLeod had established a presumption that the use of separate funds to purchase real property (as opposed to personal property), titled by tenancies by the entireties, indicates intent for the property to be marital instead of separate. The Manes court however, did not elect to extend McLeod to personal property. That court specifically held that adding a spouse’s name to an account, or depositing funds into a joint account, is not sufficient evidence to show intent to convert separate property to marital. They also declined to further clarify what evidence would suffice to show intent. Furthermore, they did not establish which party carries the burden of proof with regards to showing whether a joint account is marital or separate.

Finney v. Finney establishes burdens of proof.

In this case, Ms. Finney argued that the trial court erred when they classified two bank accounts as separate, even though there were acquired during the marriage. The Finney court first reiterated that the burden of proof lies on the party claiming that property is marital to prove that it is in fact marital by showing that the property had been acquired during the marriage and before separation and is presently owned. Upon meeting the burden, it shifts to the other spouse to rebut.

The trial court actually cited to Manes when they found that one of the bank accounts was separate—that the deposit of separate inheritance funds into a joint account did not make the account martial. However, the trial court forgot to apply the first step: Ms. Finney acquired the account, during marriage, before separation, and presently owned it; she met her burden of proof. It was now Mr. Finney’s turn to prove that, because he deposited separate funds into this joint account, it should remain separate.

Is further clarification needed?

The question remains as to how Mr. Finney could prove that the separate funds deposited into a joint account were intended to be separate property. At least one court, in Comstock v. Comstock, rejected personal testimony by the party claiming that a bank account made during the marriage is separate. There, the defendant claimed that a brokerage account created during the marriage was actually intended to be separate. In fact, he only kept his name on the account.

He also testified that he used inheritance money to establish the account, but he was unable to trace those funds in the account to the money he inherited. This was his downfall. He (apparently) cashed out those inheritance checks, and it is unknown if and how much of that money was used to create the brokerage account. The opinion is unclear, but it seems to imply that, by “cashing” the inheritance checks, he commingled the funds into a marital account. Defendant’s inability to trace the money meant that he was unable to argue that the brokerage account was separate.


1 See also Power v. Power, 763 S.E.2d 565 (N.C. App. 2014).