“My world and my life as I knew it ended that afternoon” read Rhonda Shousterman from her victim impact statement this week, referring to June 22, 2018 when York Regional Police told her that her husband had been living with a coworker after a staged wedding more than two years before. “In addition to the emotional the trail, James impoverished to me… He not only lied and cheated but he dissipated our assets to make a life with someone else.”
I do not know anything about Shousterman except what has recently appeared in the paper. But there are elements of her tribulations she has in common with other people. Stories of spending down joint assets, what divorce lawyers call depletion of the marital estate, arise in divorce courts with unfortunate regularity.
But a conniving spouse is not the only disaster that can befall a marriage. Many times disaster is the result of things like sudden injury or illness, an addiction like drugs or gambling, a collapsing family business, even personal liability from an accident can ravage the finances of both partners. That’s why it is so important to Plan Single.
Whether a financial injury is accidental or deliberate, a good financial plan is designed to provide for the couple and both individuals, taking into account the possibility that bad things can happen. The plan single approach includes protection. Having adequate insurance coverage to provide financial protection in the event of injury, illness or untimely death is just one line of defense. Beyond the “product” based solutions, the strategies for how you and your partner handle money can be just as important. Strategies like putting some assets in each partner’s individual name rather than just holding joint accounts ensures you each have timely access to money in the event of the unexpected. The Plan Single approach also strongly advocates ongoing communication about the family finances to ensure both partners are well informed. Here are some things you can do to help prevent unexpected events from turning into financial tragedies.
Review account statements periodically with your partner. Both partners don’t need to be involved in the ongoing management of all the accounts, but it is a good idea to sit down and review balances and activities on a regular basis, perhaps quarterly. It is an opportunity to notice any significant changes in account balances.
Review annual tax returns together. Hidden job losses, struggling independent businesses, even undisclosed windfalls will often appear in tax documents. You need not be a forensic accountant to realize something needs to be discussed. Just look for sudden and significant changes in any of the numbers from the prior year.
Own individual as well as joint assets. If anything happens to your partner, you will need money to pay the bills as you sort things out. Apart from hidden spending, medical, legal, or tax issues can lock you out of joint accounts. It is a good idea for both members of the couple to have some personal assets even if only for an emergency. Beyond having access to money in the event of an emergency, if done right, keeping your pre-marriage investments or any inheritances you might receive in your own name(and avoid using them for joint purchases) can provide protection for those assets in the event of marriage breakdown.
Sign up for credit alerts. It is not just spending down assets that can cause you financial problems. Sometimes, creating liabilities associated with your identity without your knowledge can cause havoc. Enrolling with credit agencies can give you immediate notice if someone attempts to create a debt in your name, or even block them from doing it.
Personal tragedy can befall any of us. While we cannot prevent tragic events or personal betrayals, you can make sure you keep in touch with your financial picture, detect a problem earlier, and protect some assets. And, if tragedy strikes, you can avoid financial ruin and have some room to grieve your loss and then start rebuilding. If you haven’t already, talk to your advisor (Financial Advisor, Lawyer, Accountant as appropriate) and see if in your personal circumstances, is there anything you should be doing, or be do differently, to better help you achieve your goals as a couple while protecting you both financially.