FAMILY LAW ARTICLES
It is commonplace for one spouse to handle the family’s finances, but with tax season upon us it does not hurt for the other spouse to pay attention. Understanding a family’s financial plan is good for a healthy marriage and necessary when one files for divorce or plans to do so.
The unfortunate truth is that spouses in charge of the money may not want to or believe in sharing the couple’s marital assets. Common examples include using offshore accounts, safe deposit boxes or deferring compensation or bonuses, but one CPA tried to be creative by overpaying his taxes with the idea of filing for a refund after the divorce.
Start by looking at the financial information
Simple starting points for double checking finances include the following:
Check the paystubs: Look at the take home pay and how much is deferred into retirement accounts and even a health savings account.
Look at the tax filings: Form W-2 includes spouse’s income as well as workplace plans and withholdings. You may want to consider paying a bookkeeper for one hour of his time to explain the documents and entries to you.
Look for other business entities: Entrepreneurs start new businesses all the time for different projects and partnerships. These may even be in other states, so it is wise to check for corporate entities or businesses here in California as well as other states in which they visit or do business. The California Secretary of State website is helpful to look for business entities within the State of California.
Other red flags to watch for
Warnings signs that something is not right include:
- A shift in their spending habits
- Transferring money between business, personal and even brokerage accounts
- A spouse proposing putting you on a cash budget (perhaps in hopes that you take less interest in the details/bills)
- Refusal to share information with you
Legal and financial help may be necessary
Tax season is a natural time to express interest in how the family finances work. Do the math to see if the official numbers for the IRS correspond to your understanding of your combined income. It is a good idea to make copies (have your own set) and have a financial expert or experienced family law attorney go over them as well. This can be particularly important when the filing is a complicated one and/or you are considering divorce.