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When news of Representative Anthony D. Weiner’s lewd online behavior broke a few weeks ago, his wife, Huma Abedin, was reportedly devastated.
To some, her reaction, itself, was a revelation. By all accounts, Ms. Abedin is a smart, sophisticated and accomplished woman. Why didn’t she know what her husband was doing? How did he keep these inappropriate online exchanges a secret from her?
Sadly, I see similar scenarios play out all too frequently with other intelligent, sophisticated and successful women. Of course, I’m not talking about husbands who surreptitiously engage in bawdy online behavior. Instead, I’m talking about husbands who are up to financial dirty tricks, hiding assets and/or income from their spouse during their marriage and especially once the possibility of divorce is on the horizon.
As surprising at it may sound, hiding assets can be extremely easy to do –especially when one spouse (typically the man) handles the finances, and the other spouse (typically the woman) is unaware, uninvolved, uninformed and perhaps even uninterested in the details of the family finances.
Our firm deals exclusively with women, and we’ve found that even the most intelligent, well-educated women can be deceived. The majority of our clients are lawyers, doctors, MBAs, business owners, Wall Street executives and celebrities, and yet many find themselves blindsided by their soon-to-be ex-husbands who cheat and steal to hide assets and/or income.
What can you do to protect yourself?
As I have mentioned before, when it comes to marital finances, often the best defense is a good offense. From the very beginning of your marriage, make sure that you are an active participant in all of your financial affairs. Have full knowledge of all marital assets, liabilities, income and expenses, and know where all copies of tax returns and other financial records are located. (See this earlier post for even more advice about building a solid financial footing with your husband.)
If it’s now too late for preventive measures, and you’re already in the throes of divorce, my advice is different. First, you may want to strategize your next financial steps with a divorce financial expert. Second, you should immediately start to be on the lookout for these tell-tale signs that your husband 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. What happens if your husband overpays the IRS (or other creditors)? He’ll get a refund later –presumably after the divorce is final. I’ve also known cases where people fabricate loans from family members. The idea here is that they can lower their bottom line by listing these debts in their financial statements or sending the family member cash to “pay the loans,” knowing that the family member will return the funds 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. But, surprise! 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.
Husbands hide assets and income for a variety of different reasons. He may feel he’s getting revenge for an infidelity. He may fear not having enough money after the divorce. Maybe he’s just greedy and feels that he deserves it! Whatever the reason, hiding assets, income and debt is unethical, immoral, illegal and subject to severe penalties when discovered.
However, the burden of proof is often on the spouse with less financial resources (typically the woman) to prove any such unscrupulous behavior. That’s why women must play it smart. Work with a qualified divorce team to help ensure that you have the professional expertise and support required to receive a fair settlement, keep your finances intact and secure your financial future.
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com), a divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce. He also advises women business owners on what steps they can take now to “divorce-proof” their business in the event of a future divorce. He can be reached at Landers@BedrockDivorce.com.