It’s not unusual for one spouse in a marriage to manage the couple’s money, including paying bills and investing savings. However, there are significant risks in leaving financial matters to your spouse if you neglect to stay informed about their actions. If the marriage ends in divorce or death, you will have to take on the job of handling your money without any knowledge or experience as to what was or is going on financially. You may also face some unpleasant surprises about how much money you have and how it was spent. Sometimes the spouse you thought you could trust acted in his or her own interest and not in your joint interests as a couple effectively cheating you out of money that should be yours.
Always review your financial matters
A recent case in our firm involved just this situation.
The parents of the wife bought her and her husband a marital home to live in. The home was originally titled in the parents’ names. Subsequently, one parent died and the other decided to transfer the home to the wife and husband. However, the husband asked that the home be put into a trust along with other assets the parties had and only put his name on the trust. The wife never read nor asked for a draft copy of the trust document and, thus, was not aware that it only named her husband until after the transfer was made. This left her in a dangerous position should the marriage end by divorce or death because she would not be entitled to the money. Even during the marriage, her husband was the one with the authority to decide how to use the money and could waste or lose it jeopardizing the couple’s finances.
To avoid this type of situation, it is important to pay attention to financial matters, particularly any large transfers. Had the wife asked for and reviewed the trust documents, she would have known what was occurring and, hopefully, obtained independent legal and financial advice to protect her rights.
What to do if your spouse is hiding assets
After the fact, it is more difficult to correct the situation. If your spouse does not want to change the trust, you have two options:
- Get a post-nuptial agreement. You can consult a matrimonial attorney to draft a post-nuptial agreement that ensures that you retain your interest in the trust.
- Go to court. The issue can be litigated (as part of a divorce proceeding or otherwise). When a trust contains assets that are marital in nature, a spouse can go to court to obtain his or her fair share of those marital assets notwithstanding that they are in a trust naming one spouse only.
However, a key point in both options is to act promptly. If you make no effort to review what you are signing or object to your spouse’s actions once you find out about it, a court may consider whether you consented. Ideally, you want to take action immediately upon learning of the transfer to demonstrate that you did not intend to sign away your rights to your spouse.
If you are concerned about your spouse’s management of your finances, the first step is to gather as much information as possible and talk with an independent financial professional as needed to understand your situation. If you suspect that your spouse is not acting in your joint best interests, it may be time to consult an attorney.
We assist clients with these kinds of issues as well as with prenups and postnups and help them if they are considering divorce or separation. Contact us for a consultation to learn how we can assist you in obtaining the best result in your matter.