Financially Sound: Telltale Financial Signs That Your Marriage May Soon Be On The Rocks

Divorce attorney Elizabeth Green Lindsey offers some telltale signs that suggest that someone's planning a divorce.

April 1, 2008

S tunned at the prospect of divorce, and speechless when the legal papers are presented, many women find themselves caught totally offguard and outmaneuvered. Their husbands have gained control of the money and the power in the opening days of the legal process, leaving them financially strapped. Many wonder, "Why was I the last to know?"

Are there signs of financial pre-divorce planning? There are common indicators that women can look out for. Women don't always see these signs for a variety of reasons, including denial, determination to save the marriage and fear of confronting the situation head-on. Of course, their husbands are not being forthright and honest and are doing their best to conceal their motives. Often, the husband's strategy is couched in terms of good financial planning and/or shifting blame to the wife for overspending and financial mismanagement – when he is the real culprit. Here are some of the most common indicators that something is wrong in paradise:

Changes to banking and credit card accounts.
Suddenly, all the financial records are sent to the office and no bills come to the home. Your husband demands to take over the checkbook. He asks you for a budget, although he doesn't live on one. The passwords change on the online accounts. The paycheck and bonus are not deposited into the joint account. Credit cards are canceled and/or limits lowered. He has a new credit card and the statements go to the office. These are all red flags for pre-divorce planning. Women need to have their own credit and access to the money at all times. If there is nothing to hide, then there is no reason for you not to see the statements and have full access to all information and a fair share of the money.

Downsizing the marital home.
While a couple's financial situation in a strong marriage may legitimately require downsizing, it can be an indication that someone is planning to leave. For most couples, the home they live in prior to their divorce is the most expensive home that they will live in. The husband's goal is to reduce the family's standard of living with the wife's consent prior to the divorce and thereby limit his exposure to claims for alimony and child support later. In addition, downsizing the home can create liquidity, which makes financial settlement easier for the husband. However, a consequence of this preemptive strike is the loss of the children's support network. Their home, neighborhood, school and friends are gone. While changing the children's home and schools may be ultimately unavoidable, this is not true in all cases. If the home is sold before the divorce is instituted, however, it is a foregone conclusion that the children's lives have been changed and support networks disrupted.

Postnuptial agreements.
Often, right before the company goes public, or the big promotion, or the sale of the business, a postnuptial agreement (the first cousin to a prenuptial agreement) is presented to the wife. While it might seem obvious that something is wrong, many women are in denial about the state of their marriage, and their husband is not about to be honest about their motives. Never enter into such an agreement without consulting a lawyer. Postnuptial agreements are enforceable in Georgia, and the current status of the law favors the enforcement of these agreements. If a husband presents such an agreement to his wife under these circumstances, it is likely that something is up, and it is not good.

Asset protection trusts.
A fairly new phenomenon in divorce planning is the asset protection trust. Warning, warning, warning. If your husband and his financial planner and/or attorney ask you to transfer assets into a trust, you must seek your own independent legal advice, no matter how uncomfortable this may be for you. Sometimes these trusts can be established by your husband with no input from you. Some women have put their homes, vacation homes, investments and vehicles into these trusts, such that, in theory, they own nothing. Asset protection trusts are often designed to divest you of the property and place it in a trust with your husband's crony as trustee who will administer the trust. Thus, when your husband files for the divorce a couple of months after the trusts are in place, he may claim that the property is not marital and the court cannot divide it in the divorce. The costs to deal with these trusts in a divorce can be staggering. The wife is often left scrambling to protect herself  and fighting an uphill battle to obtain a fair result.

Unusual funding of college and retirement assets.
Sudden funding of Uniform Gift to Minor accounts and 529 Plans for college can be a sign of pre-divorce planning. If marital money is used to fund college expenses for the children, the result may be to deplete the assets available for division of property in the divorce. In Georgia, the courts cannot order either party to pay for
college. There may be an argument that income rather than assets should pay for college, and since many women will not have income capacity comparable to their soon-to-be ex-husband's, this depletion of assets may work to the wife's disadvantage in property settlements.

Estate planning.
There are many legitimate reasons to enter into complicated estate plans. Nonetheless, vehicles such as irrevocable life insurance trusts qualified residential trusts, family limited partnerships, charitable remainder trusts, and generation skipping trusts, to name a few, may have the consequence of removing assets from the property available to be divided. Understanding the effect of these estate-planning tools, taken in context of what is happening in the marriage, is critical. You should not use the same estate lawyer as your husband, and would be wise to consult a divorce lawyer about the situation.

Cell phone behavior.
New cell phones. Prepaid cell phones. Hushed tones and whispers on the cell. Can't reach your husband on the cell during the week, yet all weekend he takes his calls, text messages and emails, and walks away while he talks. Does he sit in the garage in his car talking on the cell? Does he guard his cell phone, BlackBerry and laptop jealously? Ladies, it is time to investigate further. He is up to something or someone. All of these signs mean you should consult with an attorney. Even if you do not want a divorce, you can't avoid it if he insists on going forward. Aside from all the emotion involved in your marriage, divorce is a financial transaction. A good lawyer will help you develop a game plan for your particular case to get the best result possible. The old adage "an ounce of prevention is worth a pound of cure" applies in predivorce planning. Do not let emotion prevent you from protecting yourself. Talk to a lawyer and learn how to be proactive and take charge. Knowledge is power.

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Elizabeth Green Lindsey is a shareholder at Davis, Matthews & Quigley, P.C. (www.dmqlaw.com) and a Fellow in the American Academy of Matrimonial Lawyers. Since 1985, she has represented clients in all areas of family law, including divorce, custody, child support, prenuptial agreements, alimony, legitimation and paternity.