Without a doubt, 2020 has brought a new level of stress to many of our lives. The combination of stress from financial hardships, illness, homeschooling children, and more has put a strain on relationships.
One question women often have when things aren’t going well in their marriage is will my husband try to hide money during divorce? If so, where? Although no one really “wins” financially coming out of divorce, women are more negatively impacted than men.
According to one report from the U.S. Government Accountability Office, women’s household income fell by 41% following a divorce or separation, while men’s household income dropped by only 23%. This is due to a variety of factors, including income disparity and women taking time off from their careers to raise children.
Since many of my clients are divorcing women, I’ve heard quite a few stories of financial deceit: husbands hiding assets, income, and even debt from their wives!
Open communication about money is vitally important to a strong and healthy marriage. But what happens when divorce is looming and your husband is being evasive or defensive about money matters? Could he be hiding something from you?
1 – Where Husbands Hide Income
If your husband works a traditional job, he could be split-depositing his paycheck. He might deposit a set amount into your joint account and deposit part of his regular paycheck, overtime, or bonuses into a separate account in his name only. When I worked in HR years ago, there was a male employee who asked me to deposit his quarterly profit-sharing check into a separate account from his regular paycheck, so his wife wouldn’t know about it.
If separation or divorce is looming, your husband might defer a bonus, raise, or promotion. If he knows he’s up for an increase in income, your husband might ask his boss to wait until your divorce is final to give him a promotion so your child support or maintenance is based on his current lower salary.
Business owning husbands have more places to hide income. If your husband owns his own business or professional practice, there are many opportunities to artificially lower income. He could receive client payments in cash, keeping the income “off the books.” Your husband might purposely overpay vendors or the IRS, knowing he’ll get refunds after the divorce is final. He could also delay the receipt of orders or customer payments. If your husband is a business owner and his once successful venture started having money problems right around the time of divorce, it might be wise to retain a forensic accountant.
2 – Where Husbands Hide Cash and Assets
Today’s divorcing husbands have moved way beyond stashing a roll of cash in their sock and underwear drawers. In this digital age where everything is trackable, they’ve had to get creative. Here are some of the interesting ways he might be hiding cash or assets from you:
- Buying pre-paid gift cards or getting cash back while shopping with joint money. Your soon-to-be-ex could buy a $50 pre-paid Visa card or receive cash back at the grocery store and you wouldn’t know it by looking at bank or credit card statements.
- Opening college savings accounts in your child’s name. These accounts are not considered marital assets and therefore, you won’t get any of this money in the divorce. Yet, as the custodian of the account, your husband has complete control over it and could cash it out (with penalty) after the divorce.
- Buying and collecting assets disguised as hobbies. You might think his collection of baseball cards, old motorcycle parts, or comic books is a childish waste of money. In truth, those “hobbies” could really be worth a small fortune.
- Hiding cash, valuables, and gift cards in places they don’t think you’d ever look. Of course, they might have a trusted friend or family member hold cash for them, but sometimes it’s right under your nose – or over your head. A prominent divorce attorney told me the #1 place where husbands hide money is in the drop ceiling! Other common spots include tool boxes, hunting duffle bags, in their desk at the office, gun safes, and tackle boxes.
3 – Where Husbands Hide Debt
Sometimes your husband isn’t hiding income or cash from you; he’s hiding debt. I frequently see this scenario when there is a drinking or substance abuse problem.
Keep a close eye on your joint credit accounts. Divorcing husbands might open new credit cards, lines of credit, or even take out payday loans. You can freeze current joint credit cards so no new charges can be made, if you think this could be a problem. Red flags include you suddenly not being able to access online account information or paper statements mysteriously stop coming to the house.
Your husband can initiate a new loan against his 401(k) account without you even knowing if he’s desperate for cash. If you suspect that your soon-to-be ex is running up new debt, check your credit report and credit score ASAP. You might also want to put a freeze on your credit until the divorce is over.