In most cases, assets are shared during divorce, unless no one knows about them.
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To be honest, this wasn’t something I thought of during my divorce. Actually, I was just happy to get out with my house and child support, but I’ve heard, through clients and people on social media, that hidden assets causes lots of pain and suffering in some cases. It’s important that you are aware of where all the money is, when you try to leave a narcissist (or when they leave you). In most cases, assets are shared at divorce, unless no one knows they exist.
A past client *Melissa owned a business with her partner. She didn’t really have much to do with the day-to-day running of the business. Her husband did all of that. He would run large expenses by her periodically, but otherwise she was in the dark about where all the money went, or how much came in. By the time they were divorcing, the bank accounts owned by the business were almost empty. They would be lucky to make payroll.
Unfortunately for Melissa, when they divorced, they had to split the business, and it was run into the ground. They had to sell, and they barely broke even. Later, she found out her husband had drained all of the accounts and moved the money to a secret bank account. While she struggled to afford a new place to live, he was doing well financially. Of course, I believe she will end up doing better than him in the future, because she is a good person, and she is doing well in her career. He will continue to be narcissistic, and taking advantage of people will eventually catch up to him.
I’ve found an online resource that has been very helpful for my clients and I. It is Tracy Coenen’s website, and Instagram, Divorce Money Guide. She shares free advice on her Instagram, and has a guide you can purchase on her website to help you find hidden money.
Tracy said some of the obvious places men usually hide money, are taking it directly from the joint checking account and putting it in a separate account, getting a hidden credit card that they pay through the joint account, and with online gambling accounts. Another one is by hiding money throughout the house.
Yes, most of these can be easily found, but often, women don’t even look, or the husband explains it away as an investment, or an expense account for work, for example.
Here are a few trickier ways that I’ve heard about spouses hiding money, to avoid sharing as an asset during divorce:
- Establishing a Trust – The partner places money in a trust, establishing someone else as the trustee, with themselves and their children as beneficiaries. The trust’s terms determine how assets are distributed.
- Purchasing Life Insurance Policies – Depending on the policy, money can be borrowed, or dividends can be paid out over time. Someone besides the spouse can be listed as the beneficiary.
- Shell companies – This is a company without significant assets or transactions. The owner’s name can be hidden below several corporate entities. The owner transfers assets into the company, and it appears these assets are owned by the company.
- Owning a business – They may pay fake employees (a family member, or friend, who accepts money for them), inflate expenses, or delay large sales until after divorce.
- Investing in art or other collectibles – These are often overlooked during a divorce, and can be collected on later. (sports memorabilia, sneakers, paintings, antiques, etc.)
- Delaying bonuses or promotions – They can work with their employer to wait on payout until after the divorce is over.
- Real Estate – The partner can hide money in real estate partnerships, listing a shell company as the owner, or listing another family member as the owner. They can also take out a mortgage loan, making it appear that the value is less than it is actually worth.
Narcissists and other toxic people can be sneaky and conniving, there may be assets you never find, however, there are ways to protect yourself from losing everything.
Protect Yourself From Hidden Money
First, don’t ignore your joint finances, counting on your partner to take care of everything. I remember speaking with one client, who had made a very good living for herself with her own business before she had kids in her late 30’s. After that, she stayed home with them, allowing her husband to take over everything related to money. At one point, she was contemplating divorce, but she had no idea where all of their money was, or even how much they had. She had a debit card for their joint account, and a credit card in his name. If she were to get divorced, or even separated, she didn’t know if she could afford to live on her own, and that is a terrifying feeling, when someone else has taken care of you for years.
It would have helped her tremendously, to know how much money her spouse made monthly, how much went into the retirement account and other investments, and how much their monthly expenses were. She also needed to know the balance of each of those retirement and savings accounts.
My client and her husband could have had a weekly, or even monthly, meeting, where they went over all of the numbers together.
They ended up working things out, and it was a fairly healthy relationship, but what if your partner is a narcissist? They may not be as up front about where the money goes.
Keep an eye on any joint accounts. Check them weekly to see if there is any unusual activity. Clarify where the money went right away, so they won’t be able to say, “Oh, I don’t remember what that was for. Let me get back to you.” They also won’t be able to gaslight you and say something to the effect of, “That money is for that investment you agreed to. Remember that?”.
Secondly, insist on seeing any statements regarding 401K’s, IRA’s and other investment accounts.
If you are considering a separation, or divorce(even if you don’t end up going through with it), make copies of the last three months of all accounts. Your attorney will want these, and they will be much harder to get after you say you are leaving. If your partner refuses to let you make a copy, take note of the name of the account and the amount in there.
You will also need to make copies of any credit card statements or other debts you have. You don’t want your partner purchasing large items that you may have to share the debt on, or buying things that they will later sell, but you will get stuck owing money on.
And last, make sure you have money in an account of your own. Ideally, it would have enough money for attorney’s fees and several months of living expenses. Worst case scenario, it would have enough money for transportation, and a few days of living expenses, enough to get you to a friend or relative’s house to stay for a while. It may take a little time to get court papers filed for temporary spousal support, assuming you are eligible, or to get a job.
Finances can be scary, especially if you earn less money than your partner, or no money at all. However, peace and security can be found on the other side. The scariest thing you can do is ignore finances in the first place. In this case, knowledge is definitely power! You got this!
