EP 48: Why You Need a Secret Fund Before You Get Divorced

Why You Need a Secret Fund Before You Get Divorced

Episode forty-eight of the Divorce and Your Money Show discusses why you need a secret fund before you get divorced.

When you are beginning or contemplating a divorce, you should have a separate bank account that your spouse does not have access to. This account should only be under your name—preferably at a different bank.

Here is the reason why a secret account is important: As soon as the divorce process starts, money begins to disappear. Your spouse can transfer funds or take away assets via a number of scenarios. You will need funds to pay for divorce expenses, including your attorney. You also have to pay for your everyday life expenses while the process is going on.

Using the joint account can lead to further complications during the divorce procedures. If you do not have cash set aside for these expenditures, you could be in a situation you never expected to be in.

The account does not necessarily have to be secret; it just needs to be under your name. When you go to your attorney, you will have to disclose it anyway—as providing the details of your assets is a legal obligation.

If you are early in the divorce process or just considering it (and you do not have those assets set aside), you can end up in a terrible financial situation. Think of it as money that you have set aside for a rainy day: You are the only one who has access to it. If you have a joint email or postal address, do not make the rookie mistake of having your statements sent to that address. When things go south, you do not want your spouse to know about the details of this account.

Having a secret account is not immoral, and you should not feel guilty about it. You should feel empowered about having a separate account. It is a sort of insurance policy, which can protectyou. It is a crucial backup plan, which one needs to have before wading into the treacherous waters of divorce.

Key Learning Points:

  • When you are beginning or contemplating a divorce, you should have a separate bank account that your spouse does not have access to.
  • This account should be set up when you get married, or as soon as your relationship starts to derail.
  • Having a secret account can help you pay for expenses during divorce.
  • The account does not necessarily have to be a secret; it just needs to be under your name.
  • Do not use joint email or postal addresses for your statements.
  • A secret account is a sort of insurance and protection for you during rainy days.

Thank you for listening to the Divorce and Your Money Show. We hope the show helps you through one of the most difficult periods of your life. Shawn Leamon is also the author of Divorce and Your Money: The No-Nonsense Guide. One-on-one divorce-coaching services are available at www.divorceandyourmoney.com.

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Shawn Leamon, MBA, CDFA

Dallas, Texas

Shawn C. H. Leamon is Managing Partner of LaGrande Global, a firm that helps successful families manage large financial transitions like divorce, inheritance and selling a business.

He earned his Bachelor of Arts from Dartmouth College, double majoring in Economics and Philosophy, and his Masters in Business Administration at Spain’s IE Business School.

Before founding LaGrande Global, Shawn helped manage $1.1 billion in client assets at Bernstein Global Wealth Management. He also worked as a credit research analyst at J.P. Morgan. He is a Certified Divorce Financial Analyst, and he has been an advisor to numerous high-stakes divorce cases.

Shawn is the author of two well-received finance books: Managing Private Wealth: Principles, and Divorce and Your Money: The No-Nonsense Guide, both published in 2016.

In his spare time, Shawn is an ultra-endurance athlete and has competed in events as long as 24 hours. He is an Eagle Scout and a member of the Alumni Board of Greenhill School.