Financial Abuse

There are two categories of financial abuse: abuse during marriage that is consistent with general controlling behavior, and financial deception that is intended to make an ex-spouse suffer in the case of a divorce. It can be difficult to prove financial abuse, but it is especially important to do so, especially if the spouse intends to hide money during a divorce proceeding. 

What constitutes financial abuse?

A pattern of financially abusive behavior during marriage may include such actions as:

• Having complete and unilateral control over all finances, making financial decisions without consulting the spouse, and refusing to disclose the financial condition of the household
• Putting the non-working or lower-earning spouse on a strict budget and demanding proof of all expenditures
• Threatening the lower-income spouse (for the sake of example, the wife) that she will not receive her “allowance” if she doesn’t do X, Y, and Z
• Refusing to allow his wife to work, or conversely, requiring that she work if she wants money for food or clothing
• Using family assets for abusive or unhealthy behaviors, such as an affair, gambling, or substance abuse
• Keeping all credit cards and bank accounts in his name alone and refusing all access to his wife 

Such behavior is emotionally and financially abusive and such a spouse can therefore be expected to exhibit deceptive financial behavior during the divorce. However, a spouse may not begin financial abuse until the marriage appears to be on the rocks. Since most couples try for years to repair their marriages before ending the relationship, a spouse may see the writing on the wall or may give up on the marriage while appearing to try to reconcile so that he has time to create a financial position that leaves him with all or most of the assets and his spouse (and sometimes, kids) with nothing.

Methods of hiding assets

Some common methods used to hide money and assets may include:

• Hiding a raise or bonus, getting paid under the table, or cashing gift checks and stashing the money
• Purchasing and hiding pre-paid gift cards
• Creating pension or retirement accounts without the spouse’s knowledge or naming them as recipient
• If he has a business, creating fake employees and paying himself; making business decisions that temporarily devalue the company
• Paying a phony “loan” to a friend or family member with the intention of receiving the money back after the divorce
• Overpaying credit cards, PayPal, etc. to collect a check after the divorce

Simple strategies such as these are usually easily discovered. Some more sophisticated methods will likely only be uncovered by an experienced forensic accountant. Some of these tactics include:

• Selling investment properties without the spouse’s knowledge or approval
• Selling property or investments in a manner that hides part or all of the income (such as listing a lower sale price and receiving the rest in cash)
• Defaulting on car loans so that the cars are repossessed
• Opening credit cards in the spouse’s name without her knowledge and then purposely destroying her credit, or even purposely destroying both of their credits in order to claim bankruptcy or to blame the spouse for extravagant spending and appear “broke” in the divorce
• Canceling health insurance to force the wife to get a full-time job
• Opening “beneficial ownership of legal entity accounts.” This is a business account listing one person as the owner (for instance, the business owner) but listing another person as an “authorized user” or “administrator” (such as a bookkeeper). The devious spouse could open such an account, name someone else as the owner, and have full access to his own money but it would never appear in a subpoena, because he is not the “owner.”
• Opening offshore accounts
• Purposely taking no income or significantly lower income for years (while receiving income in other ways) in order to deny the ex-spouse Social Security
• Establishing illegal trusts that do not require a Social Security number and therefore cannot be easily tracked 

Some of these methods go beyond trying to just hide money in a divorce so that the dishonest spouse can limit alimony or child support; rather, these methods seem intent on utterly destroying the wife who loved him and shared her life with him. (As previously noted, I am using an abusive husband as an example. Of course, the situation can be reversed and wives can do this to husbands, too.) 

There is no reason to completely destroy your spouse’s credit, home, transportation, and emotional and mental health except for some cruel, vengeful purpose. This is more than being selfish; this is abuse.

We can help

The Law Office and Mediations Services of Elissa C. Goldberg, LLC, in Doylestown, Bucks County specializes in mediation and collaborative law, divorce methods that presume both parties are coming to the table intending to negotiate in good faith. I have frequently recognized patterns of financial deceit or actual abuse; however, in these cases, a forensic accountant is engaged, and if no fair settlement can be reached with the dishonest spouse, we may recommend a litigated divorce. That is never the ideal, but when dealing with an abusive spouse, it is sometimes necessary. 

Reach out to our office for a free consultation so that we can discuss your situation.