Originally published: . Volume 13, No. 7. Source pages: 7.
by Leslie Todd, LCSW Association of Family and Conciliation Courts Correspondent
According to Statistica, 6% of spouses have financial double lives: secret credit cards or hidden accounts. Few of us clinicians are specially trained to deal with money problems, but all of us will discover financial shenanigans. These may range from the client who admits to hiding expensive purchases from a partner to the naïve client who finds her husband has never paid their taxes.
Many parties will come to us with the guilt of hidden debt. Pre- marital counseling might uncover student loans or credit card balances one party was afraid to disclose to another. All clinicians will deal with clients whose addictive behaviors have caused sizeable debt. Within marriage, this kind of financial burden makes reconciliation all the more challenging. “Financial infidelity” occurs when one spouse knowingly hides their financial ineptitude– or outright scams– from the other.
Mental health professionals may be more comfortable asking about clients’ sex lives than their financial habits. We need to know how to look for red flags and when to refer to financial experts. This is why your referral list should include forensic accountants.
In cases of intimate partner abuse, financial skills may mean the difference between life and death. We may need to teach a victim of domestic violence how to access money to prepare for an escape. In this case, “stashing cash” is an act of self-protection, not financial infidelity.
A “friendly” divorce case will entail serious discussions about assets, property division, and future income. We must listen carefully to our clients’ financial concerns for their future and their children’s well-being. Forensic accountants can assist in determining income for child support and interim spousal support and advice about what is taxable. (Child support and interim spousal support are not taxable to the spouse receiving the funds.)
Forensic accountants can help the parties understand the status of the community assets and liabilities, including discussion of any prenuptial agreement and a general understanding of the lifestyle of the parties. They can analyze family businesses and consult on the value of the company and “personal goodwill,” a factor in valuation.
Divorce may complicate tax issues. Forensic accountants can advise on how to file returns and the benefits of claiming dependents. They also educate a non-financially astute spouse on realities such as financial outlook, the need for a budget or a job, how to file a return, and whether one can afford to keep the family home once the divorce is finalized. Accessing health-care coverage is another important consideration for many women and children post-divorce.
A forensic accountant will follow the money trail when one party has malicious intent. This is often needed in cases of high- conflict divorce. One spouse’s inheritance or family-owned business may be conned, or your client could be an innocent spouse in income tax fraud.
A forensic accountant knows what documents to look for to trace how the money was taken and where it has been secreted.
Your client may come in with a confession or suspicions about the partner’s behavior and intentions. You need to have some basic understanding of the family income and lifestyle from the beginning. Once you suspect a discrepancy between reported income and lifestyle, it's a red flag. Here are common techniques for hiding money. Some of these may be used for good or ill; others are downright criminal.
Stashing cash. This is most easily done by using a debit card for everyday purchases such as groceries or gas and getting a little cash back every time. One can also have a friend or relative hold cash or other assets unbeknownst to the spouse.
Having secret bank accounts. These can range from local to off-shore. People with dual citizenship or family in other countries may rely on this method.
Siphoning off money from new raises. One can arrange at work to have an increase in pay deposited to a hidden account.
Overpaying taxes and having the refunds sent to a separate address.
Using a family-owned business in various shady ways: under-reporting income, paying salaries to (unemployed) family members, running non-business expenses through the company, making a relative or friend part-owner hide assets, etc.
Embezzling from an employee and keeping that money secret from the spouse.
[Leslie Todd, LCSW, served as President of the Louisiana Chapter of the Association of Family and Conciliation Courts at its founding and again in 2018-2020. She is the 2022 recipient of the international organization’s Tim Salius President’s Award for her contributions. Learn more about the La. Chapter at www.afccla.org.]
This article is part of a historical newspaper archive. Read the original issue for its original layout, photographs and graphics.