Divorce can bring out the worst in people or uncover bad behavior that has been there all along. Unfortunately, some people try to hide money from their spouse in a divorce. Other people have hidden money throughout the entire marriage. Clients often sense that something is just not right. This is the time to take action and seek legal advice.
Often it is hard for people to put their finger on exactly what sets off the alarm bells for them. To help, here are the top 5 signs that your spouse is hiding money from Nancy Van Tine of Burns & Levinson, LLP:
“1. No transparency. This can be a problem from the beginning of the marriage. You don't have joint accounts. There is no openness about finances and no real economic partnership. This makes it super easy to hide money! Every spouse should understand the family finances and be aware of what you have and how it is held, always. It just makes it too easy for a spouse to transfer funds and hide cash if you don't know how it all fits together.
2. A change in behavior. Instead of mail coming to the house, it goes to a spouse's office or he/she gets a post office box. The spouse opens new bank accounts and you don't see the statements. He/she gets new credit cards, and the bills don't come to the home. He/she has more than one cell phone, and you don't see the bills. The extra phone can indicate a lover, and that often means money is leaving the marriage.
3. A sudden decrease in income. One of my favorite quotes (and I have used it for so long I can't remember the source, other than it was another divorce lawyer) is, "once again, the magic alchemy of divorce turns yet another prince into a pauper." This can happen more often with the self-employed, as it is much easier to finagle finances in your own business than if you are a W-2 employee. If it occurs in conjunction with #2 above, watch out!
4. New and unusual economic behavior. This tends to be more on the spending side. The spouse is buying stuff which depreciates, i.e. a fancy car, a new motorcycle, boat or jet ski -- basically wild spending on toys. If your spouse starts running up large debts or cleaning out accounts to pay for new acquisitions, watch out!
5. Rushed and controlling. When tax returns need to be signed, you get the return on the day due and there is no time to read it, nor is there a copy for you to keep. Estate planning is rushed and/or unexpected, and you don't get to discuss the plans and their meaning with the lawyer. These and other areas where speed and lack of clarity can really hurt you are considerable.”
If any of these five signs set off alarm bells in your own relationship, or more importantly if your instinct tells you that something is just not right about your spouse’s behavior lately, consult a good divorce attorney immediately. An experienced divorce attorney can inform you of your legal rights and can explain the steps you need to take to better understand your financial situation.
Above all else, the most important thing you can do is to become knowledgeable about your finances – review your tax returns, meet with your CPA, learn about your spouse’s business. This investment will pay off for you by allowing you to be an engaged and active participant in your divorce and empowering you to manage your own finances once your divorce is final.