|Divorce Rights: Opening A Secret Bank Account|
Nick Kennedy - AskMen.com
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June 07, 2010
You’ve heard of the “amicable” divorce. A couple gets together and splits their assets fairly. They try to make the process as smooth as possible. They do what’s right for the kids. They might even stay friends.
|We don't intend to offer legal advice, and following these steps could get you into more trouble than you ever intended.|
But ugly divorces do happen. There will always be the bitter, nasty, name-calling, drag-out separations that seem to go on forever. And if you know anyone who has been through one, then you know that the emotional and financial toll can be devastating. A really bad divorce can take years to recover from. Some people never recover.
The “cheaper to keep her” dictum still holds true. If a relationship can be salvaged then it’s worth it to do everything possible to make it happen. In the event that a relationship can’t be saved and you think you are headed for a nasty, bitter court fight, one of your goals may be to set up a “secret account.”
We don't intend to offer legal advice, and following these steps could get you into more trouble than you ever intended. What follows are ways that some guys have hidden their assets from their spouses, for better or for worse.
Decide how far you want to go
There are two reasons you may want to set up a secret account:
1- You don’t trust your spouse and you think that as soon as divorce papers are filed she will try to seize control of everything and leave you sleeping on the couch in your friend’s basement.
2- You have a lot of money and you don’t want to share it with her.
If your goal is No. 2, then you’ll probably want to hire an expensive lawyer who can help you with this. But beware: Most states do not have a statute of limitations when it comes to divorce settlements. So, if it was discovered at a later date that money was hidden, the case can be reopened. The three most popular methods of hiding large amounts of cash all come with serious downsides.
Open an account overseas
Switzerland used to be notorious as a safe place for criminals (and others) to “hide” cash. Not anymore. The Swiss have been turning the names of people suspected of trying to evade income taxes over to the U.S. government. Ex-spouses have been perusing those names. Andorra, Liechtenstein and Monaco are three offshore jurisdictions still listed as "uncooperative tax havens" by the Organization for Economic Cooperation and Development, meaning you still may find a level of bank secrecy there.
Place money in an account under the name of a trusted friend or family member
But will they still be “trusted” when they start getting statements in their names that include all those beautiful zeroes? In other words, they can legally spend that money as foolishly as your ex-spouse would have. This transaction also may trigger a federal gift tax.
Put cash in a safety deposit
Sure, but how much cash? It might work for a few thousand. But a few hundred thousand? Is that convenient to access? Or safe to walk around the streets with?
Also, assume that she will hire a lawyer who is an expert at finding these secret accounts. And rest assured she will be less predisposed to cooperate with you on any stage of the divorce proceedings if she believes you’re trying to put one over on her. The headlines are full of examples of guys who face the wrath of a ticked-off woman who thinks her ex tried to hide his wealth.
Set up a cash account in your name
If your checking and savings accounts are jointly owned, then you’ll want to set up a cash account in your name only as soon as possible, and get your paycheck and other sources of income deposited directly into that account. The idea here is to prevent your spouse from beating you to the punch and draining the joint account, leaving you with no emergency funds and no spending money.
Fund your secret account
Initially, you will be funding it with your current income. You then have every legal right to withdraw half of what is in your joint accounts and put that money in your secret account.
If you really don’t trust her you can try to put as much of your jointly held assets as you can into the account, with the understanding that she will try to get her share back in the divorce. The idea here is that it’s easier to share assets you have in your possession if the courts remand you to do so than it is to wrest property away from your spouse if she has them in her possession.
Contact your creditors
Close all joint credit card accounts and other credit accounts that were in use during your marriage. Don’t just have your name removed. She’ll still be able to use that card and it will still show up on your credit report. Open new accounts and get new credit cards in your name only.
Also, give written notice to all creditors that either party might have dealt with during the marriage. You’re looking for a clean break here and you want them to know that you are separated and will no longer be responsible for your partner's debts.
Make sure she’s not setting up a secret account herself
In the old days, the man was the primary wage-earner and the woman stayed home and raised the kids. Divorce settlements (alimony and the sharing of property) were designed to protect the woman (given that she had no marketable skills and no savings in her name) when the successful middle-aged husband left her for his secretary. Times have changed. Today, many women may have an equal or greater net worth than her spouse.
If that applies to you, then you’re going to want to make sure she doesn’t start stashing cash away. So make photocopies of every financial record you can find. This includes bank accounts, stock portfolios, 401K accounts, IRAs, life insurance policies, real estate holdings, and annuities. And don’t forget about tangible personal property like jewelry, antiques, fur coats, and cars.
It's your secret
Divorce is rarely a good time. But you don’t want to get burned. Take the time and consult with an attorney who can put all of your options on the table before you find yourself out on the streets.