In collaborative law divorce cases, as the neutral CPA, I prepare the financial data and educate the spouses on the financial issues of their divorce. Many times the couple has structured their marriage into separate duties. The “monied spouse” controls the money, investments, etc. The “non-monied spouse” has taken on other, non-financial duties in the family and, as a result, does not know or fully understand the family finances. As I have mentioned in a previous blog entry, this can work well for quite a long time, but causes some challenges if the couple chooses to divorce.
I see a fair number of couples in which one spouse is financially illiterate. That spouse (the “non-monied spouse”) has not read the tax returns prior to signing them. He/she doesn’t have a complete grasp of the financial investments.
Often this spouse has anchored on some financial information that is no longer accurate. He/she remembers a certain high balance in the family investment account because the other spouse boasted about their wealth. However, that does not mean the wealth is still at that level when they get into the divorce. Distrust is magnified because the non-monied spouse thinks the monied spouse has spent or hidden the “missing” money. More likely the couple has spent the money or the investments have dropped in the market decline. In these cases, I am asked to review the past account statements to explain where the money went.
This unfortunate lack of financial knowledge carries problems after the divorce. This non-monied spouse is going to have to manage his/her own finances when suddenly single. When asked, I tutor these spouses in financial literacy. Every one of them has thanked me and lamented that they wished they had paid closer attention to the family finances over all those years. For their sake, I wish they had also.