Divorce Finances Operate Below the Radar, Forbes Reports

By Jennifer Hopfinger
November 16, 2006 01:17 PM

Flip open any business magazine and you'll find plenty of stories about how to properly manage your money. You'll also find a good deal of coverage about corporations that are skirting the rules when managing theirs. But you almost never hear about a kind of malfeasance that befalls the personal finances of far too many people -- when a soon-to-be ex-spouse tries to take the money and run.

Forbes magazine's November 13th issue reports on how much husbands and wives can get away with when they try to hide their assets in a divorce.

"It's a quirk of our society: Fudge any number in a publicly traded corporation and Sarbanes-Oxley will have you behind bars. But fudge an asset figure in a divorce battle and nothing much happens. It's just accepted as part of the rough play that is expected in a bitter lawsuit," writes Richard C. Morais in the cover story, "Divorce Dirty Tricks."

Morais chronicles just how ugly that rough play can get -- and how it can cripple a financially weaker spouse. While the very wealthy have long used offshore accounts to hide assets, more average folks are sliding down a slippery slope in the name of asset protection.

Take the Missouri man who stopped paying the mortgage on a property he owned with his wife and then had his parents buy it back at the foreclosure sale. Or the Connecticut man who simply failed to mention that his stock had split three-for-one, which would have given his wife half of the $400,000 in shares he owned instead of the one-sixth she walked with. Or the Florida woman who spent thousands of dollars a month on clothes behind her estranged husband's back, sold them at consignment shops, and kept the cash.

The problem is, Morais writes, there are too few judges stretched too thin to do anything about it. And proving fraud is difficult and expensive on the part of the poorer spouse.

A sidebar offers advice on how to protect oneself from a devious ex. Not the kind of personal finance tips usually found in the pages of a business magazine, but they're obviously just as important to safeguarding one's financial future.

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Copyright © 2008 Donald W. Reynolds National Center for Business Journalism