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Divorce-Cleaning Out the Bank Accounts

Back in the good ol’ days. . .a party who decided to leave his or her spouse typically cleaned out the house, the cookie jar stash and all the bank accounts and changed the names on all the property and accounts to ace the other party out.

Is that a good idea nowadays? NOT!!

And especially where the Court has issued its economic temporary restraining order (ETRO) in your dissolution matter. Under Montana law, specifically MCA (Montana Codes Annotated) §40-4-121(3), neither party can hypothecate (pledge to secure a debt), conceal or dispose of any property nor can they cash, borrow against, cancel, transfer, dispose of or change the beneficiaries of insurance or other life, health, auto or disability coverage with only some exceptions, typically by agreement, order of the Court or for absolute necessities (such as food, housing and attorneys’ fees). The ETRO is issued by the Clerk of Court at the same time as the Summons in the dissolution, child custody or support matter.
. . . any asset you have, even IRA and 401(k) accounts would be subject to division in a dissolution of your marriage. . .
Recall the Funk case (In re Marriage of Funk, 2012 MT 14) which clarified/overturned some 27 years of cases by establishing once and for all that marital assets can consist of just about anything acquired during the time the parties were married however acquired, i.e., whether earned, purchased, inherited or gifted and however titled. That means any asset you have, even IRA and 401(k) accounts would be subject to division in a dissolution of your marriage–just because it was “your” work and “your” company doesn’t mean your spouse would not be entitled to some portion based primarily on the length of marriage.

The Montana Supreme Court just handed down a decision involving death benefits through a pension plan–specifically the Montana Public Employees Retirement Administration. In the case of Briese v. MPER Board, 2012 MT 192, a sheriff who had already filed for dissolution changed the beneficiary of his sheriff’s retirement system account, which included employment-related death benefits, from his wife to the couple’s two minor children. He did this despite the existing ETRO, without the permission of the Court in the dissolution matter and without any notice to or consent by Mrs. Briese.

Prior to the dissolution being finalized, Mr. Briese was killed in the line of duty; his widow was told by MPERA she could not collect the insurance proceeds, so she opted to secure the proceeds for the children via monthly payments. When she later sought to enforce the ETRO provisions of the dissolution, MPERA claimed she’d waived her right to collect the proceeds for herself. The Supreme Court held she had waived nothing by proceeding to follow MPERA’s instructions as her applying for benefits for her children in reliance upon MPERA’s information and instructions was not considered to be a “knowing and intentional relinquishment of a known right”.

Because Mr. Briese’s changing beneficiaries violated the ETRO, the District Court had the equitable power (Courts have two types of power: legal power involves awarding money damages and equitable power can require certain actions or inactions such as an injunction) to return Mrs. Briese to the status quo ante, i.e., putting her back as the primary beneficiary under the sheriff’s retirement system.

Remember, then, that cleaning out or changing accounts and beneficiaries or hiding money in violation of the ETRO can lead to other consequences, some rather, er uh, consequential.

About the Author

Kay Lynn LeeHailing originally from Georgia, Kay Lynn Lee received her BS from the University of Alaska, Anchorage in 1984 and her JD from the University of San Diego in 1987. Deciding to retire 2004, she discovered it did not suit, so she “unretired” in 2005. She now practices primarily in the field of family law which is both a joy and a challenge.View all posts by Kay Lynn Lee →

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