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"Secret" savings can help a spouse weather a divorce

When preparing to divorce, many Colorado spouses feel the need to set aside money in a 'secret' or 'hidden' account. This can arise from fear that the other party may try to restrict access to shared bank accounts, or could otherwise restrict their spouse's financial standing in the timeframe between filing and reaching a final divorce settlement. While there are a range of benefits associated with having access to money during this period, there are also risks that come with establishing a secret account.

One major area of concern lies in how one's spouse may interpret the act of setting aside this type of savings. In a contentious divorce, a spouse could be accused of attempting to hide marital assets, which is illegal. There is a fine line between maintaining one's own account and hiding assets to keep them out of the property division process.

The best way to ensure that one's actions are legal and ethical is to fund a hidden savings account with money that is solely that of the account holder. An example would be an inheritance, which is not marital property and not subject to property division. Other funding sources may be real estate or investment accounts that were owned prior to the marriage or proceeds from the sale of personal property, such as an engagement ring.

Setting aside money to serve as a financial safety net is always a savvy decision. However, it is important to ensure that the funding sources are legal and appropriate. In a heavily litigated Colorado divorce, a wide range of accusations can be made, and being able to prove that one's actions are within the letter of the law can go a long way toward achieving a desirable outcome in court.

Source: Forbes, "Pros And Cons Of Keeping A Secret Fund In Case You Divorce," Jeff Landers, Feb. 14, 2013

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