This topic is a bit of a sensitive one, and as such I will treat it as such. Unfortunate truth is that life happens. Statistically, 40-50% of marriages will end up in a divorce. When that happens, does having a secret bank account protect your money in a divorce?
Although this is a sensitive topic, it’s important that you are aware of the repercussions of going through a divorce. This is especially true when it comes to your finances.
Millennials are doing things differently, as compared to Prior Generations. When it comes to finances, 28% of married Millennials are forgoing joint bank accounts. Instead, they opt to have separate bank accounts.
This way of doing things has its own advantages and disadvantages, list all depends on the couple’s financial decisions and goals. Neither way is inherently better than the other.
Let’s stay on topic! If you are wondering having a secret bank account will protect your money in case of a divorce, let’s talk a bit more about that.
Remember: Digest Your Finances does not provide legal advice. This is for informational purposes only
Can you hide a secret bank account in a divorce?
No. In this day and age, every financial transaction you make, including those from a secret bank account leaves a digital trail. If you are going through an ugly divorce, your spouse might work with their attorney to uncover all your finances, even the secret bank accounts.
Things like bank statements, spending habits, and a paper trail can uncover hidden bank accounts. Legally, there is nothing wrong with having your own personal bank account. When it comes to a divorce, having a secret bank account gets a bit hairy.
There have been cases where one spouse might be hiding money from the other, but during a divorce, they are ordered by the courts to surrender all of the hidden money. Yikes!
At some point during the divorce process, there will most likely be a requirement for a full disclosure of assets. At that point, you will be legally required to disclose your secret bank accounts then. You could lie, but if the court finds out, you’ll be in a lot of trouble and potentially lose it all!
Typically, assets acquired by either spouse during their marriage is considered marital property. This property is subject to division. Information on necessarily be 50/50, but that secret bank account will have a portion of it entitled to your spouse
How do I hide a secret bank account in a divorce?
Now that you understand how marital property works, it’s now time to figure out how far you’re willing to go.
If you are dead set on protecting your money (for your own reasons) and you don’t want to share any of it, then there are ways you can set up a secret account somewhat effectively.
Remember: Doing this can have negative legal implications and consequences
1. Open a secret bank account overseas
I’m sure you’ve heard stories about offshore accounts being set up in places like Switzerland. Although this country has been one of the safest places to keep your money a secret, that is no longer the case.
Switzerland has been turning over names of people that have been suspected to be evading income taxes in the United States. Ex-spouses of wealthy people have also been pursuing names of their spouses there as well.
Although this is a viable option, it is not guaranteed to work. It can, however, be a starting point when protecting your assets from the divorce.
2. Keep cash in a secret safety deposit box
This route to only works if you are working with just a few thousand dollars.
Having a safety deposit box with hundreds of thousands of dollars might not be feasible. I mean, how are you going to walk around with a safety deposit box with a couple hundred thousand dollars? That’s a recipe for disaster.
This method also only works if your spouse doesn’t have a very good lawyer. Lawyers have ways of uncovering Secrets, so this secret safety deposit box should be one of your best kept secrets, somehow!
3. Place your secret account under a trusted friend
This one is very true can potentially very dangerous. This friend might be trusted at first, but how can you truly trust that they will not walk away with your money?
People at the end of the day young people. We are unpredictable and can do very unexpected things. Only interest people and friends that you have complete faith in.
You must also remember that, by doing this, you might also be charged a Federal gift tax. Since it is technically your money that you’re giving to somebody else, it’s important to figure out any tax implications.
Don’t keep secret bank accounts a secret
No matter what you do, chances are that your spouse will be entitled to half your money, properties, assets, and even secret bank accounts when you divorce. This is especially true with in community states.
If you are required to disclose a complete list of your assets, intentionally hiding this information from the courts can become a big deal.
If these hidden accounts are Discover it after the divorce, your divorce case can actually be reopened and you might face very steep penalties for hiding it!
Advice: Get a prenup
The simplest and easiest way to protect your assets is to get a prenup. By having a signed prenup, you both agree which assets belong to who, So if you ever get a divorce, there is no confusion.
The unfortunate side effect of having a prenup is that you will have to talk about your finances early on in your relationship. It might also give us some tension because the other party feels like they are not being trusted.
Almost two-thirds of Flores reports that they have seen an increase in the total number of people that get prenups in recent years. This is particularly true with millennials.
Final thoughts
Going through a divorce is never a good time. At some point, you loved each other very much, but along the way, you realized it wouldn’t work out.
Going through a divorce can sometimes be one of the hardest things you will ever face. This is especially true with your finances.
If you are a high net-worth individual, get yourself a very expensive and experienced lawyer to help you through the process of managing your secret bank account during a divorce. Otherwise, better to stay safe and disclose your finances, even the secret ones!
Good luck!
