Where’s the Money?
Wisdom from a Divorce Accountant
The fours pillars of a happy and successful marriage are love, respect, honesty and trust. My grandparents taught me this and that without these foundations no marriage can prosper and survive.
As a consequence of what I do for a living, I have come to believe that central to achieving the pillar of honesty in a marriage is transparency. It is also the core component required for each party to be able to trust what the other says and does.
I want you to stop for a moment and ask yourself, “what can a forensic accountant working in family law possibly tell me, a newly or happily married woman?” Well for a start, I can tell you that all women commence their marriages happily and filled with promise. Many continue to remain so and will never need the type of services I offer, and quite frankly, I am happy about that. I see enough pain without wishing to see more of it. Unfortunately, for every three women reading this article, one of them will come to know separation and divorce intimately. The next thing I will tell you is that there is a significant percentage of divorcing women who have no idea of what the family assets are or where to start looking for them. They didn’t start out this way in their marriage, it’s just what happened over time after family commitments took precedence.
So what is my intention in writing this article? I want to give you the benefit of hindsight, the learnings that I have gleaned from many divorcing couples I have encountered. A gift to you; to ensure that you and I never have to meet in this lifetime.
Givers and Takers
Some marriages still have the typical separation of duties. Females as carers for children and the home, males as the main breadwinners. This doesn’t happen for every marriage, but for a significant number of marriages, this is still the norm. Add to this the personality differences we find in marriages, what I call the “Givers and Takers”. Givers are those who always put the needs of their spouse and children first, Takers are those who always put themselves first.
Sound familiar?
It is the Taker personality, especially when they are also the main breadwinner, that causes many of the problems I come across. These personalities believe they have a greater entitlement to the family money pot because they have gone out to earn the income and may not place as much value on the efforts of the stay at home spouse. During the course of the marriage they may have taken steps to syphon off money from the family unit. They may have opened a separate bank account or credit card account, they may not have mentioned the pay rise or bonus they received, they may have taken out a loan on the side to fund a joint hobby with a friend like a share in a boat or a horse; whatever the reason, they are spending family money for their own personal enjoyment without the consent of the family. Taker personalities may also hoard wealth in safety deposit boxes, in overseas bank accounts, have other forms of assets such as gold, gems, jewellery or foreign currency, have property registered under an alias or cash accounts such as betting or escrow accounts.
These “Taker personality breadwinners” may also have taken specific steps during a marriage to ensure they control the family money and how it is spent. They may control where the superannuation is held, be the main point of contact for banking facilities and influence all major financial decisions made by the family. Their control may also include having bank statements and any other financial or business correspondence sent to an address other than the family home.
When marriages start to fall apart, advice is often sought in advance from professionals who can offer an insight into the pitfalls that may arise. The Taker personality may take this one step further; they may seek advice on how to minimise the family asset pool to be divided between the two divorcing parties. This is especially so where the main source of income is a business owned by the divorcing couple, as it is an asset that needs to be valued for the purposes of the property settlement. In my line of work, I see divorces being planned for. This planning may occur up to two years before one party says to the other they wish to end the union, add to this the period of separation between the couple and you have a “perfect storm” scenario where one party has sufficient time to “run down” the family business so it is valued at less than what is normally expected.
What to Look Out For
Some of the actions taken to run down a business may include; working less hours whilst claiming business is slow, opening a secret business and funnelling the work through the new business, claiming a bogus loan owed to a family member or friend, spending money on unnecessary capital works and putting non business expenses through the business; to name a few. All these strategies add up to diminishing the value of the business and ultimately, the amount it contributes to the divisible assets in the marriage. Once the property settlement and divorce are finalised the business is then “cranked up” to once again making substantial profits for the party who retained ownership.
The examples I have given here are not extreme, they are common and I come across them time after time when reviewing the finances in a marriage. I am not saying they will occur in your marriage but I am saying they do occur in some marriages. What surprises me, is that people think that by being aware of what might happen may “jinx” their happy marriage. I don’t see it like that. I believe that by being aware of what may happen, greatly reduces the risk of it ever happening to you.
Your Right to Know
Being in love doesn’t mean surrendering your rights to know – being in love should encourage sharing responsibility and having transparency in your marriage. Make a point of sitting with your partner and discussing your financial situation in detail. Find out what bank accounts, loans and investments are held by the family and with whom, what is being earned, how the business is run, what insurances are held etc, etc.
You owe it to yourself and your family to be informed and knowledgeable to a point that if something ever does go drastically wrong, that nothing will come as a shock and your time is concentrated on helping your children come to terms with the changes in the family and not on wondering why you didn’t see that “perfect storm” coming your way.
About the author
Elizabeth Camillo is the principal of her own firm specialising in forensic accounting in family law. Her role in a divorce is to search for any hidden money or stashed assets purchased with family money, to review the performance and value a family business, and other indications of financial deceit in a marriage.
Prior to commencing her own practice, Elizabeth investigated the management of client monies by lawyers in the state of Victoria. She is a member of CPA Australia, has a Masters in Professional Accounting and is an accredited trainer. Elizabeth is a regular presenter and trainer at Leo Cussen Centre for Law and the Real Estate Institute of Victoria.
She is the author of the soon to be published book, “Where’s the Money, Honey?: Finding the Hidden Assets in your Divorce”.
