Financial Savvy is a Must for Married Couples
When a couple faces divorce, inattention to family finances can be costly
I recently met with a friend who discovered that her husband had been having a longtime affair. This news came as a complete shock to her. She had read the statistics regarding divorce in the U.S. and thought "fortunately, that will never be me!" Even though she is an accomplished woman with a legal background, nothing prepared her for this situation. The emotional strain has been difficult and she realizes that making financial decisions will be a challenge. She is not alone. Many of my clients, both men and women, find themselves in the same situation, wondering how they will gather the information they need, and make important decisions under stress.
The emotional roller coaster of a divorce or the unexpected death of a spouse is no time for surprises. Marriage is a partnership, and none of us would enter into a business partnership where we do not pay attention to the bottom line or feel entitled to ask questions that help us to understand where our money comes from and where it ends up. Yet, in today's world, most of us are so busy with children, work, and social commitments that we don't have time to stay on top of our family finances the way we should. When a couple faces divorce, this inattention can cost one spouse in a big way.
In many marriages, one spouse pays all of the household bills, makes investment decisions and manages savings. The other is often in the dark about the family finances. Some spouses lose track of the other's use of credit and pay no attention to spending habits until debt is out of control.
When a divorce is on the horizon, you will need to provide your lawyer with a complete summary of your family assets and liabilities. If you don't have that information, your lawyer can obtain it, either from your spouse or from the financial institutions where you keep your money. Even if you can't do that, you can give your lawyer a basic outline of where your money and debt are, and where he or she can look for more detailed information. But being organized up front can help keep a lid on legal costs.
Familiarity with family finances does not require hours of reviewing complex financial data. If your spouse passed away suddenly, you would need to be prepared to manage the family finances in a short period of time. You are entitled to no less in the event of divorce. With a few simple steps, you can resolve to improve your understanding of your finances and gain information that will benefit you, whether your marriage is intact or not.
First, ask questions. You should know which institutions you bank with. You should maintain a complete list of the account numbers in a safe place so that you know where to find them if a crisis arises. You should know how to access these accounts on-line and be sure to record the log-in and password in a file. Don't carry these numbers around with you, for security reasons. Family checking account registers and savings passbooks should be kept in a place you can both access. If your spouse passed away suddenly, you need to be prepared to manage the family finances in a short period of time. You are entitled to no less in the event of divorce.
Next, pay attention to mail that comes to the house. If you notice account statements arriving from banking institutions where you didn't know you had accounts, take note. If you aren't getting adequate answers from your spouse, copy the envelope the statement came in so you can show your lawyer that an account exists at a particular financial institution. In many instances, your lawyer can subpoena that financial institution to provide account information for all accounts your spouse maintains with them. Of course, it doesn't make sense for your attorney to send subpoenas to every bank and brokerage house in Connecticut. So knowing who to ask for information is an important piece of the puzzle.
Keep three-ring binders with account statements for every stock or investment account you maintain. If you or your spouse receives an inheritance or other significant sum of money, keep detailed notes and documentation about when it was received, where it was deposited, and what the funds were used for.
Keep track of your bills on a monthly basis. Family bookkeeping software is the best, most complete source of family financial information. But if you don't use that software, you should at least become familiar with what it costs to run your household every month. Resolve to answer the following questions for yourself: What is my mortgage balance (what would it cost to pay my mortgage off if I wanted to do that tomorrow)? What is our monthly mortgage payment? Are property taxes and real estate insurance included in my mortgage payment or not? If not, what do they cost? What do we spend on household help - lawn maintenance, cleaning help, repairs every month? What are our recurring household expenses - oil, propane, trash collection, cable costs?
Become familiar with how your spouse is compensated at work. Does he or she have a base salary? Does he or she receive incentive compensation of any kind or commissions? Are there "perks" associated with his or her employment? Does he or she get stock options and if so, when do they vest?
In gathering this information now, while your marriage is on solid footing, you will save yourself a good deal of time, money and effort in the event that you find yourself in a crisis situation.
Jocelyn B. Hurwitz is a Partner with Cohen and Wolf, P.C, where she chairs the Firm's seven-member Matrimonial Group. She serves as a court appointed master, mediating cases in several Connecticut courts, and has written articles and lectured on many aspects of Connecticut divorce law. Ms. Hurwitz can be reached at firstname.lastname@example.org Cohen and Wolf, P.C. is a full service law firm of 50 lawyers with offices in Bridgeport, Danbury, Westport and Orange.