Five Considerations For The Divorcing Woman Who Earns More Than Her Husband

November 17, 2014

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We educate, empower and support women before, during and after divorce.

Wives still typically earn less than husbands, and after divorce, it’s usually ex-wives who receive support payments. However, that’s not always the case. In fact, according to U.S. Department of Labor statistics for 2012, in households in which both spouses reported an income, 29% of wives earned more than their husbands.

Especially in high net worth marriages, earning a higher income or owning more wealth in personal assets than your spouse makes for special considerations when it comes to a divorce. If you earn more than your husband, here are five things you need to do:

1. Protect your business.
If you own your own business or professional partnership, this doubtless represents years of education, long hours of hard work and untold sacrifice of many kinds. You’ve earned your position, and you don’t want to see these hard-won gains put at risk in the event of a divorce.

There are several established types of trusts and agreements that can help safeguard your business –and optimally, you’ll consult a divorce financial planner to help you evaluate the best ways to divorce-proof your business while you are still single or, at the very least, while you are still happily married and the possibility of divorce is not even on the horizon.

Why?  Because the laws that govern trusts vary from state to state, and in most cases, the look-back period can range from four to seven years. That means if your divorce starts happening before you exceed that look-back period, your trust could be undone by the court. (The rationale being that you were trying to place assets beyond the reach of your husband in divorce.)

2. Keep some of your money separate.
I advise all married women, whether or not divorce is on their minds, to keep a separate bank account of their own with a fairly substantial balance. This is a critical way to maintain some financial independence. It should be an account that your husband can’t access… and possibly doesn’t even know about. Whether you tell him about it is entirely up to you. Every marriage is different, and while some husbands encourage the separation of funds, others may be outraged. (See my recent blog post for more about the pros and cons of maintaining a “secret” fund.)

3. Maintain inherited or gifted assets separately.
Bari Z. Weinberger, Esq., owner and managing partner of the Weinberger Law Group, a New Jersey family law firm, explains that to keep inheritances and gifts out of a divorce, these assets must be kept absolutely separate. “Do not put the other spouse’s name on the asset or accounts,” she says. “Do not commingle the assets or funds with marital assets or funds. Do not utilize the inheritance monies for marital purposes, such as to pay off an existing mortgage on the marital home. If you do, you might run the risk that the entire remainder of the inheritance will change nature and become subject to division with your spouse upon divorce, even if the grantor never intended for it to be shared.”

4. Make clear legal agreements about who owns what.
A prenuptial agreement is generally drawn up to protect the spouse with greater assets from losing an unfair proportion of those assets in case of a divorce. While it used to be considered somewhat insulting to ask for one, these days, prenups are increasingly recognized to be reasonable, thoughtful formalizations of agreements between spouses-to-be as to what assets will be considered marital property and what will be maintained as separate property.

Bari Weinberger reports that most of her clients recognize the prenup as an intelligent business plan so that in the event of a divorce, the couple can save significant funds in lieu of litigating these issues. “Naturally, the couple appreciates that the financial resources saved by avoiding litigation can be better applied toward child related expenses or future retirement funding,” she says.

Of course if you are already married, it’s too late for a prenup! However “postnups” are becoming more common as well. Although they are not as bullet-proof as prenups, they communicate your intentions to the court, and are preferable to having nothing in writing at all. (Note: Postnups are not recognized in all states.)

5. Remember that earning more doesn’t mean you’re immune to domestic violence.
Finally, as we wrap up Domestic Violence Awareness Month, I want to remind everyone that spousal abuse occurs in all socio-economic groups and between spouses of all ages and incomes. If yours is the higher income, people might assume that you couldn’t be physically or emotionally abused. That’s just not so. If you are suffering spousal abuse, don’t let your larger income contribute to a feeling of shame. Get help.

No matter what the difference in your incomes, it’s vitally important that you and your husband maintain crystal clear lines of communication about finances, and that you formalize your agreements when possible. Treat it as a sign of mutual respect in the marriage, and esteem for your own worth, as well. Always Think Financially, Not Emotionally® when it comes to managing your money and planning for a secure financial future.

Jeffrey Landers is a member of the DailyWorth Connect program. Read more about the program here.