Does this sound like your marriage? “My spouse manages most of our money, including paying bills and investing savings. While I trust him or her, I’m worried that if something happens, I won’t know what to do.” If you’re in this situation, you are right to be concerned. To protect yourself, here are some questions to ask yourself:
What are the risks if my spouse dies or we get divorced?
There are significant dangers in leaving financial matters to your spouse. If your 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.
Should I review every financial and legal document?
You should read and understand any financial and legal documents that may affect your finances and/or legal rights, such as financial statements, tax returns, credit card bills, loan documents, prenuptial agreements, and other information. A recent case in our firm is an example of the problems that can arise when a spouse doesn’t pay attention to paperwork.
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.
The wife could have avoided these risks by asking for and reviewing the trust documents and financial transfers and seeking professional advice as needed.
Do I lack confidence in handling my finances?
There are resources to help you improve your financial literacy if needed, including books, articles and classes. You should also consult independent legal and financial professionals who can explain your finances and advise you regarding your situation and legal rights.
How do I know if my spouse is hiding assets?
Reviewing documents carefully and asking questions can help alert you to potential problems. If your spouse is evasive, defensive or withholds financial information, it may also be indicative of hiding assets. A financial professional (accountant, CPA, financial planner or forensic accountant) can help analyze your finances and determine whether there may be problems you don’t know about.
If you’ve discovered that your spouse is hiding information from you, you may want to consult a matrimonial attorney about protecting your rights.
In the case discussed above, the wife had two options:
- Get a post-nuptial agreement. We advised her that we could draft a postnuptial agreement that ensured she retained her interest in the trust.
- Go to court. She could also litigate the issue (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 them, a court may consider whether you consented. Ideally, you want to take action immediately upon learning of any transfers or hidden assets to demonstrate that you did not consent or intend to sign away your rights to your spouse. This is true regardless of what information your spouse is failing to disclose or lying about.
How can I protect my finances in marriage?
You should go through your finances with your spouse and start sharing financial responsibilities and communicating regularly to keep each other informed. If you are concerned about your spouse’s management of your finances, 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.