It is typical that one spouse handles a family’s finances, but it is great time for the other to get involved now with tax season in full swing. While it does not hurt for the non-bill-payer or finance person to understand the family’s financial plan, it becomes almost crucial when a spouse is contemplating divorce or has concerns about the family finances.
The unfortunate truth is that temptation can get the best of a spouse, prompting them to hide money or property that are actually marital assets. Common examples include stashing cash in a safe deposit box, opening offshore accounts or deferring bonuses or compensation until after the divorce. One CPA even tried overpaying his taxes to the IRS with an eye towards filing for a refund after the divorce. He was unsuccessful, but it nonetheless illustrates the lengths to which people will go.
Good places to start
It can be daunting to try and understand a stack of financial papers that you usually sign without question. However, there are some relatively straightforward places to start looking for financial information, particularly if you suspect that a spouse is trying to hide money.
Look at those tax returns: Form W-2 will not only list the spouse’s income, it also indicates if there are any savings plans as well as withholdings.
Look at paystubs: This will show how much is deferred to retirement accounts or more obscure places like a health savings account.
Red flags to watch for
Other relatively straightforward clues that funds are hidden include:
- A lot of transfers between personal, business and brokerage accounts
- A spouse proposes a cash allowance or budget so you do not have to worry about bills
- A general change in spending habits
Do the math
As you go through the papers to sign, make copies if possible, or simply look them over and see if the numbers on paper more or less match up with what you are told. If the information is too complicated to understand without a financial degree or just too troubling, it may be best to speak with financial expert or a family law attorney. While former can explain the numbers, the latter can look over the information and offer a tentative analysis of how the finances of a divorce would look if indeed they are hiding money.