In the past few years, the term financial infidelity has gotten a lot of play in the media. This term refers to any form of dishonesty between partners in financial matters. This could range from lying to a spouse about how much a pair of shoes or golf clubs cost, squirreling cash away in a box for a rainy day or establishing secret bank accounts in another state.
I read about one study that suggested 1 in 20 American couples were engaging in some type of financial infidelity. But in my world of private investigation and divorce, this form of “cheating” is hardly a new or uncommon phenomenon.
Today I’d like to address something that is far more common and dangerous: financial ignorance within a marital relationship – when a partner knows nothing about the finances.
At home, it’s been no secret to the man that the wheels have started to come off the bus. By this time, he’s been able to dissipate and/or hide many of the assets – long before any divorce proceedings or financial investigations begin.
This issue is prevalent in high-income areas like Orange County. (We have our corporate office in the heart of Newport Beach). There are countless women in Southern California and throughout the United States simply living in a bubble.
These women live in beautiful homes and drive expensive cars. They have a wallet full of credit cards, accounts at restaurants and clubs and never see a bill. They sign whatever tax forms or financial papers are put in front of them without reading them. They don’t know how much their husband makes or spends and don’t care because life is great.
Until the wheels come off.
I usually come in right about here, generally after a husband has been caught cheating and the wife has decided to file for divorce.
In marital cases, about 80% of my clients are women. When they sit in front of me at the office, I list some different asset search options that we will likely need to perform on their behalf:
- a basic asset search,
- bank, savings and checking account searches, and,
- stocks, bonds and securities searches.
75% of these clients look at me like I’m from Pluto. They don’t have any idea what these terms mean. Even worse, they have zero knowledge of the financial affairs in their own household.
Meanwhile at home, it’s been no secret to the man that the wheels have started to come off the bus. By this time, he’s been able to dissipate and/or hide many of the assets – long before any divorce proceedings or financial investigations begin. Accordingly, it becomes more difficult for us to locate all the assets and get a true financial picture.
If married women knew where their household bank accounts were located and had an accurate financial understanding of their joint affairs, men would definitely not be so far ahead of them in matters of divorce.
My clients come from every income level, and financial ignorance is equally common in what I call “pots and pans” divorces – when there are very few assets to divide and there’s no wealth involved on either side.
Across the board, I would estimate that 70% of married women do not have a clue about the family finances.
Across the board, I would estimate that 70% of married women do not have a clue about the family finances. In households where assets are north of $10 million, my estimate would jump to 90%.
Over the years, I have helped thousands of women when they decide to divorce. Most sit across from me, in grief and shock. What they thought was a fairy-tale marriage has fallen apart spectacularly.
I ask them:
- “How much does your husband make?”
- “How much is your house worth?”
- “How much did you pay in taxes last year?”
- “Where is your money held?”
Soon they’re not only sad, but panicked: They don’t know the answers.
If this is a woman with an average-income, this is the reaction I get 75% of the time.
If she’s a very rich woman, 95% of the time.
I’ve been doing this kind of work for a very long time and I stand by these numbers.
If you are in the roughly 5-25% percent of financially-informed, empowered women, good for you. If you’re not, it’s never too late to start. Ignorance is never bliss, particularly the financial kind.
Remember that if you don’t know where the assets are, you will be getting half of nothing – which is what many women end up with.