If you know that a divorce is in the near future, wanting to protect yourself financially is a common instinct. Whether you are the primary wage-earner who has supported your family since you got married or you are a stay-at-home parent who has put your career on the back burner in order to focus on raising your children, having financial stability after a divorce will be important to you.
Planning early to ensure you have adequate financial resources after a divorce is crucial to success in this area. However, you don’t want to fall victim to one of the most common mistakes people make before a divorce which involves hiding assets or intentionally diminishing your marital estate.
Hiding your assets can take many different forms
If you are the one who manages the finances and earns the money, or if you and your spouse are both independent earners, you may be able to transfer money directly out of the account or make small withdrawals every time that you get paid in order to set up a fund for yourself. On the surface, this seems like a smart move.
Your spouse may not notice a couple of hundred dollars at a time going out of the account, and you will have resources to help you maintain your standard of living and provide for your children if you have any. Unfortunately, until you file for divorce or formally separate from your spouse, the money coming into your house is marital or shared income. Hiding your income from your spouse could result in getting caught if a financial expert reviews your records.
You don’t need to make a hidden pool of cash or open a secret bank account to hide assets. You could also move physical possessions, like jewelry, art or antiques, out of your house to a friend’s place or a storage unit. You might make multiple large purchases of items not intended to benefit the household but rather you as an individual. You could even rack up massive debt on shared credit cards because you know your spouse will have to help pay them off.
What happens when you get caught hiding assets or diminishing the marital estate?
The goal of divorce proceedings is usually a fair and reasonable outcome, so those who try to manipulate their spouse or the courts in an unfair manner may eventually pay the price for doing so. There have been situations in the past where a spouse who attempted to hide large amounts of income or assets from their partner prior to a divorce wound up losing the entire amount that they hid.
If you rack up credit card balances or diminish the marital estate, the courts may take those amounts out of what they award you in the divorce. Before you start making any financial moves because you intend to file for divorce, it’s a good idea to sit down and get advice from someone who understands the law and the best ways that you can protect yourself.
