The Secret Cash Stash– Is It a Good Idea?
Are you prepared for a marital emergency? Can you hide money from your spouse in a secret account?
Should I keep a secret cash stash? Transcript
Hi, I’m Lee Rosen. Should I keep a secret cash stash?
Putting money in a secret account. Is it a good idea? I don’t know. I meet people that say, “I just need to know that I have some money there in case of an emergency.” I have a friend whose mother tells her that every woman ought to have some money stashed away somewhere because if things do go badly in the marriage, she may need the funds. Now, today, men, women, things are equal. Maybe the mother would tell every guy to do the same thing to have some money stashed away.
I will say that, in my experience, men often have access to the cash. Women usually have access to the cash, but there are instances where it’s more often a woman who doesn’t have access to the cash, and the husband has in some way isolated it.
So should you do it? Should you not? A really, really tough question, and we’ll talk about the legal issues and the emotional issues, but you’ve got to make that decision for yourself. I think if you’re here on this website, learning about North Carolina divorce issues, you’re probably nervous about the finances and nervous about money. So maybe for you, it’s not a bad idea. Let’s talk it through for a minute.
Legally, it’s fine to put money into a separate account. There’s no legal issue at all that you need to worry about. If you want to do it, go ahead and do it. However, do a couple of things. Number one, create a paper trail. Keep records of where the money came from, how much it was, when you got it, where you put it, etc. Be very careful about record-keeping because ultimately, we may need to figure that out.
For instance, if the money came to you from a family member, we’re going to need to know that because that may well be your separate property. If it came from money you earned from work, we need to know that. So keep records so that we can fully understand where this money came from, how you acquired it, and what you’ve done with it. That’s important.
Secondly, be careful about where you take the money from. You need to be careful about, for instance, if you have money in an IRA or other retirement account, and you move it out to put it into your secret stash, well, that may create a taxable event. So you want to be careful about the source of these funds, and pulling it from a place that’s not going to create more problems than it solves.
And then finally — and this is why I think you ought to really consider doing this — one of the strategies that we see spouses use is called starving their spouse out. They try to cut their spouse off financially as we negotiate, and put them in a very difficult spot where they need to settle in order to get access to cash. And that’s probably the strongest reason for having this divorce fund set aside, this secret stash. So that you’re ready to deal with that, and if they try to starve you out, your response is, “Hey, do what you need to do. I’m still here. I’m still negotiating. I’m not going to settle until I get a fair deal.”
So legally, you can do it. There’s no problem at all from a legal standpoint. But be very thoughtful about the emotional issues that you may create. If your spouse finds out that you’ve done this, this could create a major breach of trust. Let’s face it. If you found that your spouse was siphoning off funds, you’d be upset about it. I mean, that’s just the reality of a marriage. This is not what we expect to have happen. In some instances, it has become so emotional that I’ve seen these discussions turn into violence. This can be a trigger in a violent relationship.
So I want you to be very thoughtful about whether you do it, how you do it, why you’re doing it. Don’t just do it on the spur of the moment. Don’t just do it impulsively. This is a big decision. And what I have found is that in relationships that aren’t working very well, that discovering that one spouse has been hiding money can be the straw that breaks the camel’s back. This can be the trigger for the end of the relationship. And so be very cautious about this. Be very thoughtful about this. Only do this if this really makes sense in the context of your relationship.