For many Massachusetts spouses, the decision to end a marriage marks a stressful and emotional time. Making matters worse, it can be hard to project how one’s finances will shift as the divorce process moves forward, and many worry that they will run into financial trouble at some point before the final property division settlement is reached. To lessen these fears, many spouses set up a ‘secret’ bank account or cash to get them through the divorce.
There are a number of benefits to having access to one’s own money while a divorce is pending. In some cases, the other spouse will react badly to the divorce, and may restrict access to shared bank accounts or other sources of family assets. This can leave the other spouse with little funding to pay for their legal needs or the cost of daily living. Other times, the decision to set aside some money provides a sense of security, even if that funding is never needed.
However, there are risks associated with setting up a hidden savings account. One issue involves the risk that one’s spouse could make an accusation that the act of setting aside money is in effect hiding family assets. This could have negative effects on one’s divorce process, especially if the case goes before a judge.
The best way to mitigate this risk is to simply fund the account with assets and income that is strictly your own property. This can come from assets that were brought into the marriage such as real estate or retirement accounts, or money that was obtained through an inheritance. When there is any question over whether funding is separate or shared property, it is best to ensure that the account is within the boundaries of Massachusetts law before moving forward. Property division issues can be complicated enough without having to battle over how a hidden account was funded.
Source: Forbes, “Pros And Cons Of Keeping A Secret Fund In Case You Divorce,” Jeff Landers, Feb. 14, 2013