Even before a marriage is irretrievably beyond repair, one or both spouses may have been hiding money without the other spouse’s knowledge. How common is hiding money from your spouse? If self-reported surveys are any indication, it occurs in roughly one third of marriages.
In 2011, The National Endowment for Financial Education (NEFE) released a study finding that 31% of people who combined finances with their significant other have been deceptive with their spouse/partner about money. Of that 31%, 58% say they hid cash from their partner/spouse.
1. Request a copy of your joint tax return from your local IRS tax office. The cleverest of divorcees may stretch the truth about their after-tax income by directing more money into a 401(k) plan, a deferred compensation plan or a health savings account. High deferrals into these and other savings accounts will lower their take-home pay. Soon-to-be exes will point to this amount to reduce alimony and child support obligations.
2. Regularly log-in to your joint accounts and look for suspicious withdrawals or transfers.
3. Look through credit card statements for overpayments. A spouse who makes an overpayment is essentially using the credit card account as a savings account.
Credit card companies that receive overpayments rarely send the difference back to the cardholder and simply credit the account. Good for them and your spouse, bad for you, because you're in the dark about the financial infidelity they’ve committed.
1) Paypal accounts and Venmo can be used to stash or park money. But just because your spouse has a Paypal or Venmo account that you didn’t know about doesn’t mean they are hiding money, they may have opened it up before you met.
2) Bank statements and credit card statements used to come in the mail but you haven’t seen any in months. Maybe you have found receipts listing the last four digits of an account you don’t recognize.
However, there may be perfectly legitimate reasons for not receiving snail mail or opening a new account. Maybe your spouse wants to go paperless and forgot to pass on the online account information. Or they opened up a new card to get airline miles for a surprise vacation or wanted to save money at the time of purchase and forgot to tell you. But if you are hesitant to ask, you may already have your answer to, “Do I have something to worry about?”
If you’re the “out-spouse,” the spouse who does not deal directly with the finances, simply ask for for copies of all financial records. If your spouse is able to produce all records, the information gathering process might not be too painful.
Sometimes, your spouse simply can’t find the records. If so, the two of you can work together to gather information. With online access to everything nowadays, it’s easy to get account records. You can also send joint requests for records to mortgage companies, banks, retirement plan administrators, etc.
As painful as it is to discover financial decisions were made without you, stashing away money means they aren’t planning on creating a better financial future for the both of you -- and that speaks volumes.
The Divorce Resource Centre of Colorado understands that if couples can’t solve their financial difficulties during the marriage, it is harder for them to agree on financial issues when the marriage has fallen apart. If both spouses understand their financial reality, any decisions made during mediation can be done with each spouses interests in mind.
As Certified Divorce Financial Analysts, we’re trained to understand complex tax issues, IRS rulings, capital gains, dividing pensions, etc. We assist divorcing spouses in every conceivable financial situation you could imagine with an innovative and creative approach that is enhanced by decades of experience.
For an overview about our divorce financial analysis process, click here.