Your Secret Fund

As a Divorce Financial Strategist, Jeff Landers has helped many women and their divorce attorneys decide on the most advantageous way to divide marital assets, compute alimony and negotiate more favorable settlements.

Here is his advice:Married women need to keep more control of their own money by maintaining a separate bank account,one that their husband has no access to and maybe doesn’t even know about.There are several advantages to keeping this kind of “secret” fund, but there are a few potentially significant pitfalls, as well.Every marriage is different, and every woman has to decide for herself what may or may not work in her particular situation.

Pros of keeping a secret fund:

It’s secret. Having money that your husband doesn’t know about can be very powerful emotionally, as well as financially.These days, many women are years into lucrative careers when they marry. If you gave up paid work to devote time to parenting and household management, however happy a decision that is, you may have taken a significant blow to your well-earned independence and self-determination. Maintaining a financial reserve that is all your own can help alleviate that sense of loss.

Granted, this kind of private financial reserve doesn’t have to be secret; it could simply be funded with separate –ie non-marital –assets.Women, particularly those who marry later, often bring significant amounts of separate property into their marriages. With the right planning –like premarital protective measures (prenups, trusts, etc.) –these assets can remain separate and provide a measure of security and assurance. Even after they’re married, some women use postnups as a way to protect themselves financially if the marriage fails and they aren’t able to pick-up from where they left off career-wise.

So how much money should a woman keep in her secret fund? It depends.If you need to divorce a narcissist and/or abuser or might have a huge custody battle, you might require hundreds of thousands or even millions of dollars. Naturally, that amount of money would be difficult to accumulate under most circumstances, but several of Jeff’s clients were able to survive and defend their rights because of a large inheritance that, fortunately, they kept as separate property. Whatever amount of money you put into your secret account, the inner knowledge that if need be, you can take care of yourself, at least to some extent, can be priceless.Your husband doesn’t have access to the money.

Jeff firmly believes that women should not surrender their financial independence when they marry. This means maintaining funds that are their’s alone.If they sense divorce anywhere on the horizon, it can be critically important that they have a source of funds that their husband cannot get to. In his practice, Jeff has come across far too many horror stories about how husbands cleaned out joint accounts, leaving the wife little or no money to hire an attorney and the rest of her divorce team. This is especially dangerous when dealing with a narcissist and/or abuser who will have no qualms at all about running up the legal and other divorce expenses ad infinitum, just because he knows the woman won’t be able to keep up. Maintaining your own financial reserves can thwart this tactic early on.

If you have money of your own, and he doesn’t have any say in how it’s spent, you will find yourself on more solid ground where all marital financial decisions are concerned.Set aside possible divorce, for a moment. Maybe your husband decides to invest heavily in something you don’t believe in, or wants to donate substantially to a cause you don’t support. Knowing there is money that only you control, you have both a firmer position and a better perspective in those conversations.

If you are headed for divorce, then obviously you want money available to spend on your own team of professionals, and he should have no say in your choice.

Cons of keeping a secret fund:

It’s secret.Keeping secrets in a marriage can create trouble of its own. Your private bank account should not be intended to cause an erosion of trust in your relationship. Only you can decide if this is a factor in your marriage, so think about it carefully (and maybe even discuss before you get married).Maintaining a secret account could be considered a breach of trust legally, and women should think about the consequences of having this kind of account, especially if it is fairly significant.A woman could be accused of hiding assets. While having an account in your own name for your own use is not at all the same thing as hiding assets so they can’t become part of a divorce settlement agreement, you want to be very careful not to cross that line.You’ll have to disclose all of your accounts –secret, or otherwise –on the Financial Affidavit that’s part of your divorce proceedings. And, NOTE: If the money in that secret account was not separate property (premarital, inheritance, etc.) and was accumulated during the marriage, it is still marital property and will be divided accordingly.

If you use a secret account to fund expensive separate vacations, clothing, hobbies, an affair, etc., you may be charged with dissipation of the marital estate.This type of secretive conduct may have a negative impact upon a litigant’s credibility.

Bottom line: No litigant should risk marring her credibility over a single issue, and if a marriage shows signs of trouble, a woman should embark upon an exit strategy that is safe, ethical and transparent.For example,women can sell their engagement ring or another item of separate property and apply the proceeds towards their counsel fees.

The advantages of maintaining a secret fund often outweigh the potential pitfalls. It’s important it is to think financially, not emotionally, well before a marriage runs into trouble . . . or even, happily, if it never does.