Every once in a while, there is a divorce case where there is a real risk that one of the parties is going to bilk a community property financial account and run. This is more likely to happen in cases where one party has connections to another country and wishes to take community assets or the parties’ children to that country while suffering little to no repercussions for their actions. This can be especially disastrous in child custody litigation. If one party absconds with the children to another country and bilks the parties’ financial accounts, the aggrieved party will have fewer financial resources to prosecute an undoubtedly expensive international custody battle.
There are steps, however, that can be taken to prevent the other spouse from running off with hard earned community assets. Most attorneys understand that they can seek an emergency order from the Court. What many attorneys do not know, is that a party can actually unilaterally freeze an account, even one held in the name of the other spouse!
Financial Code section 1450(a) reads as follows:
(a) If an adverse claimant delivers to the bank at the office at which the deposit is carried or at which the property is held an affidavit of the adverse claimant stating that of the adverse claimant’s own knowledge the person to whose credit the deposit stands or for whose account the property is held is a fiduciary for the adverse claimant and that the adverse claimant has reason to believe the fiduciary is about to misappropriate the deposit or the property, and stating the facts on which the claim of fiduciary relationship and the belief are founded, the bank shall refuse payment of the deposit and shall refuse to deliver the property for a period of not more than three court days (including the day of delivery) from the date that the bank received the adverse claimant’s affidavit, without liability on its part and without liability for the sufficiency or truth of the facts alleged in the affidavit.
Of course, in California, spouses are fiduciaries to each other and continue to remain fiduciaries to each other until their divorce proceedings are completed and the assets are divided. If one spouse suspects the other spouse will bilk community funds, they can deliver an affidavit in conformity with Financial Code section 1450(a) and the bank will have to comply with it. It is important to remember that this remedy cannot, by law, last more than three court days. This is where Financial Code section 1450(b) comes into play:
(b) If at any time, either before, after, or in the absence of the filing of an affidavit by the adverse claimant, the adverse claimant procures and serves upon the bank at the office at which the deposit is carried or at which the property is held a restraining order, injunction, or other appropriate order against the bank from a court of competent jurisdiction in an action in which the adverse claimant and all persons in whose names the deposit stands or for whose account the property is held are parties, the bank shall comply with the order or injunction, without liability on its part.
This is the authority most attorneys and parties are familiar with: the authority of a court to, indefinitely, freeze a bank account. In nearly all cases where there is a likelihood that a party will abscond with community funds from a bank account, the best practice is to first invoke Financial Code section 1450(a) in order to freeze the account as soon as possible. Then, as soon as possible, get into Court and have the judge freeze the accounts indefinitely, before the three court day deadline to unfreeze the accounts ends.
Feel free to contact us if you are considering a divorce from your spouse, a legal separation, or have questions regarding the freezing of assets in family law cases. Nancy J. Bickford is the only Certified Family Law Specialist (CFLS) in San Diego County who is also a licensed Certified Public Accountant (CPA) with a Master of Business Administration (MBA). Don’t settle for less when determining your rights. Call 858-793-8884 in Del Mar, Carmel Valley, North County or San Diego.