One of the more interesting things I read recently on Forbes had to do with whether or not you should have a “secret” fund of money in case of divorce. The author, Jeff Landers, looked at the possible advantages of keeping some of your assets separate from your partner’s, as well as the idea of keeping the fund itself secret. He also consider the pitfalls of hiding assets from your spouse if a divorce does come up.

broken heart

Separate Finances for Couples

One of the main points of the article was that it’s a good idea for couples to keep some finances separate. The modern view of marriage, as well as the fact that many individuals come to a partnership with their own assets, is a reason that some are a little more reluctant to combine finances.

Landers thinks that, even if you do combine some of your assets, and if you do have marital assets that are shared as a result of the marriage, there should be some separation. You should have a separate fund to draw on.

But should it be secret?

Landers isn’t as clear about whether or not you should keep your separate assets secret from your spouse, but he does think it’s a good idea to have money that your significant other can’t access. He is especially adamant about this point in cases where you are concerned that an abusive or narcissistic partner will drain your joint assets, leaving you with nothing.

Personally, I don’t think that you should keep these types of assets secret from your life partner. My husband and I have combined most of our finances. We have a single account where we pool all the money, and we buy pretty much what we want, after the important stuff is taken care off, using our joint assets.

However, I do have accounts in my own name. The savings account and the taxable investment account are in my name only (mainly because my husband doesn’t like to be bothered with filling out his end of the paperwork for joint accounts). And, of course, the retirement accounts are separate, with us each having an account in our own name.

The accounts that I have in my own name aren’t secret, though. My husband knows about them, and he knows how to access them online. They aren’t hidden from him. It’s money that, technically, I could probably use as my own, or at least have access to if my husband suddenly turned on my and drained the joint checking account, or ran up huge bills on the credit cards (I don’t expect him to, though).

Protecting Your Finances

The issue of protecting your finances when you are involved with someone intimately is becoming a more important topic as time goes by. First of all, if you don’t have a legal partnership arrangement like a marriage, common law marriage, or civil union, it can be difficult to protect yourself once you start combining finances.

With a legally recognized partnership, there are what are considered “marital assets.” As Landers points out in his article, even if you have your own account, in your own name, if you use assets considered shared due to your state of legal partnership to fund the account, those assets are still considered “marital assets,” and your partner might have claim on them. And you might have claim on marital assets that your partner has in an account in his or her own name.

If you don’t have a legally recognized partnership, but combine finances anyway, you might find yourself without adequate protection. Your partner could drain your joint account, and you can’t claim, in a divorce proceeding, that he or she did something wrong with the marital assets.

(You should consult a lawyer about this, though, since I am not one. Check with a knowledgeable family law attorney for more information on what assets are considered marital, and the implications that come with hiding assets from your spouse.)

Protecting your finances can include taking steps like:

  • Pre-nuptial agreement
  • Post-nuptial agreement
  • Starting with separate accounts to begin with
  • Keeping pre-union assets in your own name and separate from community assets
  • Making sure to keep your marketable skills up to date so that you have something to fall back on

It’s important to be knowledgeable about your family finances, and take transparent steps to ensure that you are financial protected.

Photo by miguelpdl.