Fun money, secret savings or war chest -- all adds up to the same thing: hiding cash from a spouse. Learn what to look for and why the schemes sometimes backfire
I've been hearing about a lot of women lately who hide money from their spouses. And they have no desire to tell 'em, either.
These aren't the financially dependent women of yore, who relied on their husband's salaries (and whose only financial cushions in case of divorce, illness or emergency were these secret nest eggs). These are modern, working women -- some with families, some without.
One woman I know calls the several thousand dollars she has squirreled away her "security blanket." It's not an escape route (she and her hubby are happily married). Nor does she think he would mind if he knew about it. She's just afraid he'd want to spend it -- and she likes being able to pay for extras for herself and the kids. Another woman has a fascinating "don't ask, don't tell" policy with her spouse. After they pay the bills, he doesn't ask what she does with the money she earns and she doesn't tell him.
But this isn't about women hiding money from men (although a survey by British online bank Cahoot.com found that about 75% of women admitted to hiding money, compared with 53% of men). It's about the fact that both genders hide money from their mates, and how you can tell -- and when you should care -- if it happens to be your partner.
Don't jump to conclusions
If you're suspicious that your mate is holding out on you, your best bet is to calm down, says Violet Woodhouse, an attorney in Newport Beach, Calif., who specializes in divorce -- the event most likely to reveal who has been hiding what from whom. Although hiding money is certainly something that happens, she says, "I disagree that it's that common."
Far more prevalent, she says, is one partner's perception that they are being deceived. But in most cases, that suspicion turns out to be more paranoid than true. The partner who thinks there's missing money is often the one less involved in the couples' finances to start with. "They do the spending, but not the financial management," Woodhouse says. "So they don't know what the big picture is."
Richard Barry, a matrimonial lawyer in San Rafael, Calif., and a former president of the American Academy of Matrimonial Lawyers, agrees that hiding money isn't as common as people believe. He's been specializing in this field for three decades, and as more women have become financially secure in their own right, he says he's seen fewer instances of either spouse hiding money.
Besides, he points out, "It's harder to do than one supposes. To hide money, you almost have to hide it in cash, literally under a mattress, if you really don't want it found."
Anthony Fava, a New York tax accountant, adds that it's almost impossible for one spouse to siphon off a big chunk of income without the other spouse noticing. In order to set aside serious money, he says, you'd have to be doing it over a long period of time -- and most people have no reason to be that deceitful.
(Although I love the story Ginita Wall, a San Diego CPA, told me about the client who managed to save $250,000 over the course of her 45-year marriage by squirreling away her household allowance. I should be so squirrelly!)
So how do you hide money, anyway?
Still, that doesn't mean hiding money is uncommon. Fava says he typically sees two types of secret accounts. The first is the war chest. "It's when the couple knows the writing is on the wall," he says. "It's done just before a divorce or separation, or during the breakup."
Fava isn't a big fan of this strategy. "I've had clients who obviously just socked away some money in an account. That isn't the answer -- any smart lawyer or private investigator can find it. But if a person is ingenious, there are ways to hide money from a spouse."
Gold ingots require quite a bit of cash -- and they fluctuate according to the gold market (which recently hit a six-year high). But because you don't have to give your Social Security number when you purchase them, they don't leave a tax trail.
The second type of secret account is more innocent. Usually a couple will come in to have their taxes prepared and later one spouse will call and confess a secret account, asking the preparer to discreetly add in the interest or dividends. The amount they're hiding is typically only three or four thousand dollars, and men are as likely to do it as women, he says.
And why hide a few thousand dollars? "I have so much work crossing my desk, I don't usually give it much thought," Fava admitted. "If I had to speculate, I'd say -- it's probably crazy money, fun money. I don't think there's any malicious intent."
Hiding money ain't all it's cracked up to be
Whether or not you could or would or do hide money from your significant other, there are a few things to think about.
Many people don't get to keep the money they've hidden. Since most people who hide money do so in anticipation of a divorce, "A lot of times that hidden money just ends up paying the lawyers," says Wall.
And if you live in a community property state, unless you've truly hidden your assets in such a way that they can't be found, your spouse will get half of them anyway -- at least. Woodhouse recalled a well-known case in California, where the wife divorced her husband after she won the lottery. She hadn't told him about her winnings, so the judge declared it a fraud and gave her husband everything.
Sounds harsh, but Woodhouse believes it was just. "We are fiduciaries to each other. Everyone is accountable."
Woodhouse believes that even spouses who salt away just a little fun money should reconsider their motives. There's nothing wrong with having your own account, she says, but there's a lot wrong with hiding it from the person who otherwise shares your home and heart. "It's an issue of respect," Woodhouse says. "(You're) entitled to keep a separate account -- and claim sovereignty over it."
But secrecy only seems to lend autonomy. True respect for each other's financial needs can only be achieved through direct and honest communication. Otherwise, Woodhouse says, "You're just diverting assets away from the marital good."
Signs, warnings, clues and red flags
Let's say your spouse has a little more socked away than three or four thousand dollars. How would you know?
1. The tax tip-off: Check your tax return first. Do the numbers correspond to what you've earned, spent and saved? Do the 1099s seem to be in order? Interest and dividends are reported there, along with the names of the financial institutions. Hint: If you don't know where your assets are invested and where the accounts are kept, this would be the time to find out.
2. Chronic cash crunch: If your partner is suddenly, chronically short of cash, or if their $200 per week ATM withdrawal doubles, that could be a sign.
3. Rebound reticence: There is a greater incidence of hiding money in second and third marriages. People have been through their first divorce and they think they got the worse end of the deal -- as most usually do -- and they don't want it to happen again.
4. Big changes: Any dramatic changes in the way family finances are handled. Did that joint savings account suddenly disappear? Was there a piece of a stock portfolio that 'got rolled over' into something else?
5. Big purchases: Antiques, art, classic cars, gun collections -- these can be more valuable than you'd think.
6. Defensiveness: If you ask about your joint finances and your partner responds dismissively or defensively, that's often a red flag. It's your money, too, and you're entitled to know about it.
7. Obfuscation: Your spouse likes to keep control of the finances -- and keep you in the dark. One example: He or she wants you to sign the tax return three seconds before they dash to the post office.
8. Tapping the budget: Unexplained cash advances or big grocery tabs. Is someone getting large chunks of cash back? You might want to inquire.
9. Cheating on taxes: Fancy financial footwork on tax returns or doctoring business expenses could be a bad sign. If your spouse is cheating the IRS, they could be cheating you, too.
10. Mail delivered elsewhere: Does the mail come to your home? If not, that could be a red flag that your spouse doesn't want you to see certain incoming statements.
