As I started this, it occurred to me that I had been to this topic before.  Last April 19 I reported on a story published by PBS about spouses who accumulate debt in secret and then want to “share” the debt when the marriage collapses.  The February 2020 issue of The Magazine of the American Association of Retired Persons (AARP) contains an article titled “Living with a Thieving Spouse.”  The article broadens the topic beyond what I wrote about before.

A 2018 Harris survey suggests that 41% of people who combine finances confessed to financial misbehavior. Another article in the Journal of Financial Therapy in 2018 tried to break down what that misbehavior is.  It found 24% of those surveyed hid a purchase; 23% lied to their partner about what a purchase cost. To no one’s surprise, 22% spend money on children without sharing those expenditures with their partner.

These are misrepresentations of a lesser sort. Nevertheless, 11% of people in a relationship take money from accounts on the sly and an equal number have a secret credit card. Four percent do not tell their partner about changes in their wages.

As divorce attorneys, we have seen all of this, e.g., the spouse who left for work every morning for a year when he had been terminated and had no job to go to. How could that be? Easier than you might think.  The spouse opens a new account and puts a chunk of retirement assets into it so that he can deposit an amount equal to his net pay once every two weeks, just as his employer used to fund your checking account. Have a buying addiction? Have your purchases delivered to a place other than home and then rent a storage cube. We have also seen people who treated individual retirement assets as a gambler might. They were certain that Tesla or some other promising stock was the ticket to wealth. They forget how many American fortunes have been sacrificed on altars with names like Enron, Chesapeake Energy, and even gold plated stocks like Sears and General Electric.

The AARP article notes that people who fall prey to a deceptive spouse feel both duped and foolish. However, the far bigger issue is whether their discovery of fraud leaves them time to recover from the disappearance of resources they assumed were there and spent years accumulating. More and more Americans seem to assume they can work indefinitely. In so doing, they ignore the fact that while we think we can work forever, our minds and the bodies do not always cooperate. As divorce lawyers when we meet with a person 50 years of age we contemplate 15 more years of productive income earning life. If your spouse pillages five years of retirement savings on speculative investments, toys or “finding him/herself,” you can’t get those five years of retirement savings back. We have also witnessed situations where a spouse received a financial windfall and spent it without ever reporting the income to tax authorities. If you file jointly, the law presumes that you participated in this event and will be responsible for the unpaid taxes.

What to do? It is tax season. Every day financial statements and tax documents are arriving on your doorstep. They are decidedly boring and often confusing documents. But those documents tells us lots about your financial status today and in the future. If you don’t understand those documents, spend some time finding a person who can help you understand. That may be an accountant or a financial planner. Understand that you need to have a grasp not only of your own financial condition, but that of your spouse as well. The AARP article notes some things that signal problems including:

  • Change in passwords that disconnects you from account information.
  • Unusual cash withdrawals or other irregular transactions. Today’s endemic use of debit and credit transactions makes this much easier.
  • Failure to produce a tax return to until the very last minute. If you are uneasy, tell your spouse you will need to go on extension. When you hear, “I already filed,” insist on seeing what the IRS was told.

This is your financial future. You need to protect it. If you are stonewalled, meet with a divorce attorney. You don’t have to file for divorce. Even if you file, you can always withdraw your request. But every day we meet with people who have allowed a train to leave the station never to return because they feared the repercussions of confrontation. You do not want to be sixty years or older and find out that back taxes are due or that the retirement savings you thought were there, are not. Courts can solve many problems, but they do not replace money lost to prodigal conduct.