Some folks are always honest, some folks are always cheats and some folks, when they feel threatened, can become cheats. That’s a sorry truth in divorce work, because divorce is threatening. Lots of people try to hide money, and generally a good divorce lawyer can pick up the problem in the first client interview. I know this is usually considered to be male behavior, but I have found that women can be the cleverest at hiding money.
Here are my 5 top categories for setting off warning alarms.
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.
The best protection is to be knowegable about your finances from the get-go, meet with your CPA and the family financial planner, and look at all the documents. Never, ever sign something blindly. If you feel your marriage is on shaky ground, consult an attorney to get to know your rights before its too late.