Are You Unwittingly Giving Your Spouse an Incentive to Divorce You?
Wondering why many married people have put themselves in a position — unwittingly — where their spouse has a huge financial incentive to leave them?
These individuals that I come across all the time — because of the way they have structured their finances, are giving their spouses a strong incentive to divorce them. I guarantee you that at least a third of you watching this video right now fall into this category, where your spouse has a huge financial incentive to divorce you.
Ok so first, what do I mean by an incentive to divorce you? The law is all about incentives. Contracts are about incentives. It can be something small. If you rent an apartment, there’s probably a late fee if you pay your rent after the first week of the month, right? That’s to incentivize you to pay your rent on time. The incentives can be large — say you’re a professional basketball player. You may have a provision in your contract that says you get an extra 20 million dollars for making an all-star team. That’s because the team or management of the team wants to give you an incentive to play very well. If you’ve ever worked a job where you get a bonus for hitting certain benchmarks or achievements, you know what I’m talking about.
The law is very much about incentives. If you watch this channel, you know that marriage is the most important financial contract you’ll ever sign. Whether you realize it or not, your financial life changes completely overnight. And what a lot of people don’t realize is that once you’re married, the law says that every dime you earn after the wedding date is considered joint money. That first paycheck you earn legally belongs as much to your spouse as it belongs to you. If you don’t have a prenup in place that says otherwise, every dollar that each of you earn belongs to you as a couple, it no longer belongs just to you as the individual.
But so many couples continue to live their lives as if that money is 100% theirs. They keep separate bank accounts — and more than that, they continue to live separate financial lives. There are so many married couples other there where the spouses don’t know each other’s income. They don’t know how much each other has in retirement. They don’t know what kinds of investments their spouse has. And a lot of you are keeping that information secret from your spouse. You or your spouse may be withholding that information from your own spouse.
I’ve met couples where one spouse earns the lion’s share of the income, but they keep most of that money in their own bank account. And they only share a tiny fraction of their wealth with their spouse.
Here’s the truth — if you’re that person, all of that money that you’re keeping in your own bank account, or in your own retirement account, or your own brokerage account. That money doesn’t belong to you, it belongs to you and your spouse. Legally, you are hiding your spouse’s own money from him or her.
I met a woman a while ago who has been married to her husband for 20 years. They had a joint bank account, but only the wife’s paycheck went into that bank account. The husband had access to the wife’s bank account, but she had no access to his bank account. He’d transfer money into the “joint account” for them to pay expenses, but she had no idea what he had in his bank account. And he wasn’t about to share it with her — she had no idea what he had in retirement, what he had in investments, what he had in cash. And he refused to give her access to any of the money. Turns out he was sitting on about a million dollars of net worth — that legally belonged to the both of them. The only way for the wife to get access to that money was to divorce him. By hiding a million dollars from his wife, this guy created a 500,000-dollar incentive for her to divorce him, which is what she did.
Which brings me to my point. First, recognize that your marriage is a contract, it’s not just a love contract, it’s a financial contract. You want your marriage contract to incentivize you to stay together, not to divorce. So you and your spouse come to an agreement on what money will belong to you, what belongs to your spouse, and what belongs to you as a couple — you can do that in a prenup or a postnup. If you don’t have one of those, however, you should be clear that everything you’ve earned during the marriage belongs to both of you, and it’s not going to do any good to hide those assets or accounts from your spouse, at the end of the day, you might be pushing them to divorce you to get what is legally theirs.
