In many marriages, the husband assumes most of the responsibility for money matters. Naturally, that arrangement can “work” on some levels, but all too often it can be problematic. When a husband assumes the role of financial caretaker, his wife can easily lose control over certain assets. Over time, that can lead to feelings of distrust and resentment. Plus, it makes it very easy for a husband to hide financial details he doesn’t want his wife to see.
If you are going through divorce –or even thinking that you might be headed in that direction –it’s critical that you reverse this trend and start paying close attention to your family finances.
But, please, don’t misunderstand. I’m not recommending that you snoop. Scrolling through your husband’s emails, listening to his calls or voicemails, or anything of that nature can land you in serious legal trouble. (Make sure you consult with your divorce attorney so you understand precisely what is --and what is not –permissible under the laws in your state.)
What you need to do is find legal ways to protect yourself. If you believe your husband has financial tricks up his sleeve, start organizing your personal finances under the guidance of a qualified divorce financial advisor. Also, you should immediately be on the lookout for these tell-tale signs that he may be hiding assets and/or income.
1. Bank and other financial statements are no longer being delivered to your home address. A change in regular delivery could signal that marital assets are being diverted or dissipated. Check with your bank, credit card companies, etc. to make sure that you receive copies of your statements. You’ll want to start gathering these, as well as tax returns, pension/IRA/401K statements and other financial documents, so that you can keep your own records and be alerted to any unusual activity.
2. A sudden decrease in salary. Any dramatic decrease in salary may indicate that your husband has decided to defer salary and/or hold commissions and bonuses for future distribution. (That way this income won’t be “on the books” until after the divorce is final.)
3. Intentional overpayments. Overpayments to the IRS or other creditors will be refunded, but if planned strategically by your husband, this money may not arrive until after the divorce is final. Another common tactic for hiding business income is to lower the bottom line by fabricating loans to family members. Your husband may be listing these debts in his financial statements or sending the family member cash to “pay the loans,” knowing that Uncle Jo and Aunt Mary will return the funds to him after the divorce. You should also watch for money that might be transferred to your child’s (or his child’s) name.
4. No new clients, or too many new employees. If your husband owns a business, there are many different ways he can “cook the books” in order to make the business appear less valuable than it is. Maybe he’ll pay employees who don’t exist, or “pay” friends and family who agree to hold the checks until after the divorce is final. He could also delay signing new clients until after the divorce settlement is signed. Remember: The less the business is worth, the less you’ll get.
5. Defensive behavior. A husband who suddenly becomes secretive, controlling or defensive about money could be someone who is diverting or dissipating marital assets. A forensic accountant can help you uncover this type of deceitful activity.
Whatever your husband’s reason—revenge for infidelity, fear for his own financial security post-divorce or just plain old greed—hiding assets, income and debt is unethical, immoral, illegal and subject to severe penalties when discovered.