Safeguard Your Assets: 15 Clever Ways to Secure Your Cash Before Divorce

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Divorce can be an emotional and challenging process, and financial upheaval is just one of the many stressors.

Unfortunately, it’s not uncommon for individuals to try to hide assets before getting a divorce in order to keep them out of reach during settlement negotiations; however, unless carefully hidden, it’s likely that these assets will eventually come to light.

Here are 15 clever ways you can safeguard your finances ahead of filing for divorce so that you feel secure throughout the entire process.

#1. Purchase Prepaid Gift Cards

It’s easy for the opposing attorney to figure out what you’re doing if you transfer money from a joint account to a separate account.

On the other hand, it’s not easy for them to figure out what you’ve purchased with money you are spending from a joint account.

Purchase some prepaid gift cards that you can keep on hand for use in the future. They’re not traceable, and you can use them anywhere credit and debit cards are accepted.

#2. Invest In Something That Is Hard To Be Divided

One of the best ways to ensure that your money will stay with you after a divorce is to invest in something that cannot be divided, such as real estate or precious metals. 

Not only are these assets likely to appreciate in value over time, but they can also act as a buffer against any settlements that may occur during the separation proceedings.

#3. Take Cash Back On Purchases

This is one of the easiest ways to hide assets from a spouse.

When you go grocery shopping or stop to buy anything else where there’s an option for cash back, take full advantage of that. Use your debit card to pay and take out $10-20 on top of each purchase.

It’s not enough that it’s noticeable, and you can quickly put away some cash in a savings account or by stashing it somewhere.

The key here is making it a small amount.

If your groceries are usually $100 a week and suddenly, weeks before you file for divorce, they increase to $500 a week, this will raise a red flag. But increasing it to $120 on random weeks doesn’t look so bad.

With that said, what will an extra $60 do for you in the long run? You have to do small amounts for years to make it worth your while.

#4. Open A New Credit Card Account

Another option is opening a new credit card account before your marriage ends.

The trick here is to ensure it is a card offering cash back as a reward.

Now shift your spending to this card to build a cash back balance. Pay the monthly bill as usual.

Then after the divorce ends, you can redeem the cash and transfer it to your checking account.

If you don’t mention that it is a cash back credit card, you should be able to get away with this.

However, if the attorney for your spouse is good, they will see the cash back amount and want half.

#5. Overpay Your Credit Cards

As with overpaying your taxes, you can also overpay your credit cards.

When you do this, you will have a negative balance on your card. If you stop using the card, the credit card company will usually send you a check for the balance.

But the extra money will cover your new spending if you keep using the card. To have an amount returned to you, you must keep paying more than you are charging.

#6. Hide Money Using Cryptocurrency

“A new way people try hiding money is using cryptocurrency,” according to Chris Chen, CFP®, RLP® Wealth Strategist at Insight Financial Strategists.

Since it is difficult to trace most crypto transactions, it is a good option.

But any lawyer worth their money will either try to track this money down or somehow get a portion of it included in the divorce agreement.

#7. Enlist The Help Of A Friend

Another option for hiding valuables from your spouse is to get a friend to help. You need to make sure this is a close trusted friend.

Take any valuables you have and give them to your friend for safekeeping. Once your divorce is final, you can take the items back.

#8. Put Money In A Child’s Name

Some people resort to opening an account in their child’s name at the bank.

These custodial accounts are the child’s, but they cannot act on the account since they are a minor.

They need an adult. So you put your name on the account and deposit the money.

After the divorce, you take the money out of the account.

#9. Hide Money In Your Business

If you own your own business, you could hide some cash here.

Common ways include hiring fake employees or buying imaginary equipment and funneling this money to your personal account. But many divorce attorneys know these tactics and will most likely learn about the money.

#10. Divert New Income

Let’s say you’re due for a raise at your job.

That’s great, right? It is, but the timing of that raise could mean you’ll be sharing it with your spouse.

If your raise goes into effect before the dissolution of your marriage, your spouse’s attorney will jump over that extra income, ensuring it’s added to the overall marital assets.

You have a couple of options for keeping that raise for only you. One is to defer or delay the raise if you can.

Speak to your employer about saving your raise until after the completion of the divorce proceedings.

Another option is to determine the exact amount your paycheck will increase and direct deposit all the money from your raise into a separate bank account.

As long as your spouse and your spouse’s attorney are not aware of your separate bank account, that will be your spending money to keep.

The problem, though, is this secret might be hard to keep, especially if the attorney is good and wants to see paystubs. Your best option is to work with your employer to delay the raise.

#11. Exaggerate Debts

You’ll have to get a little sneaky with this one.

An example of exaggerating debts is setting up a loan with a family member or friend. Keep track of every time you pay this person to establish a record for the court.

Your income and debt amounts determine the basis of the equitable distribution of assets and spousal support.

Exaggerating debt levels makes it appear to the court that you have more going out in payments than you genuinely do. You’ll also get all that money back from the person you’re making those payments to later.

#12. Purchase Valuables

The key to this one is purchasing valuables that won’t raise any red flags. Some items are obviously valuable and highly marketable.

For instance, if you suddenly purchase an original piece of art painted by Vincent Van Gogh, red flags will go up everywhere.

You can buy antiques, rugs, discreet collectibles, and other uncommon investments that aren’t as overtly high-value. It’s in your best interest to purchase items more likely to fly under the radar regarding their value.

#13. Underreport Income

Marital property includes money in all bank accounts, other accounts, and other assets.

Your divorce settlement will include detailed instructions for separating property between you and your spouse.

The process for property division starts with an in-depth financial analysis of marital assets. Your income amount is determined by what you’ve reported on your tax returns.

If you underreport your income when doing your taxes, your spouse’s divorce attorney only knows that amount.

Remember that this is a risky way to hide assets because of its potential legal implications. As a result, it is not something many recommend you do.

#14. Overpay Taxes

You can change your tax deductions through your employer at any time.

That means that instead of more money hitting your bank account every paycheck, more money is taken out and paid to the IRS as taxes.

When you overpay your taxes, that money returns to you at tax return time as a refund. You’ll just need to be careful about the timing of your tax filing.

Ensure you file so your refund is issued after all divorce proceedings are complete.

#15. Rent A Safe Deposit Box

You can rent a safe deposit box and securely store anything of value.

You can fill it with jewelry, collectibles, cash, art, and anything else small and valuable. So if you have any collectibles that have meaning to you, consider storing them in a safe deposit box and then claiming you lost the item.

Sometimes the best solution for keeping valuables separate is to put them somewhere the other spouse will never know to look.

Legal Ramifications

You should know some things before deciding to hide assets before or during a divorce. It’s against the law to hide money and other assets from a spouse and their attorney during a divorce.

You shouldn’t even disclose this information to your own divorce lawyer.

Christine Luken, Financial Dignity® Coach, says that “the one and only time I advocate hiding money is if you are being financially controlled or abused, and it’s the only way for you to come up with the money to retain your divorce attorney. Financial abuse or control is also present in 98% of physically abusive relationships.”

What Happens If One Spouse Gets Caught Hiding Money?

At the least, the court will order the spouse caught hiding assets from the other spouse to give half the hidden assets to them.

However, many times the judge could require more than that. A judge may decide that the spouse hiding assets should turn over all the hidden assets to the other spouse.

Family law courts don’t take kindly to one spouse hiding assets from another. In some cases, you could be found in contempt of court. That can result in fees rendered on the dishonest spouse or even jail time.

With that said, there are some instances where you unknowingly hide money. For example, you may have forgotten about a 401k plan from an old employer.

Why You Should Hire A Divorce Lawyer

You should hire a divorce lawyer because money can get hidden in many ways.  Even though you are looking to hide money, your spouse may be doing the same thing.

According to Jen Swindler, CFP®, AFC®, Senior Wealth Manager at Vincere Wealth Management, “an attorney will be able to look through documents and statements better than you because they deal with them regularly.”

They may even be able to clue you in on account types you might not have thought to look at. Additionally, you might want to consider hiring a Certified Divorce Financial Analyst who will help you understand the long-term impacts a divorce will have on your finances.

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