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Financial Abuse in Marriage: What Advisors Can Do

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Financial abuse in marriage is an insidious version of emotional abuse in which the abuser uses money as a threat to control their spouse — most often, the wife. Financial advisors are in the best place to call out abusers and help take these troubled relationships to a healthier level, as New York City matrimonial attorney Jacqueline Newman tells ThinkAdvisor in an interview.

Though wives may financially abuse their husbands, it is wives who are the chief victims of domestic financial abuse, points out Newman, who has provided expert commentary on CNBC, CNN and Fox Business, among other media outlets.

In the interview, the managing partner of Berkman Bottger Newman & Schein discusses five ways financial abuse manifest:

  • Being kept in the financial dark about assets
  • Stealing money from a spouse,
  • Doling out an allowance to the spouse,
  • Requiring an accounting of every cent spent, and
  • Forbidding a spouse to work outside the home.

A founding member of the American Academy for Certified Financial Litigators, Newman specializes in serving the affluent in divorce litigation and mediation, equitable distribution and prenuptial agreements, among other areas.

ThinkAdvisor recently interviewed the lawyer — who works with financial coaches on a case-by-case basis — on the phone from her Fifth Avenue office. Her mission, she says, is “to help people get out of unhealthy relationships and become open to fresh new ones.”

Here are excerpts from our interview:

THINKADVISOR: Is financial abuse a form of emotional abuse?

JACQUELINE NEWMAN: Absolutely. It’s all about control.

Why is this issue surfacing in marriages nowadays?

Historically — stereotypically — men handled the finances and women handled the home. Now, as more women are in the work force and are no longer playing as much of that traditional role, their involvement in finances is growing. But there are definitely situations where the husband will say, “I don’t want you involved in our finances,” trying to control the woman that way. This is seen as financial abuse. Financial abuse has been happening for a long time, but now it has a label and is more identifiable.

Most of the time, you say, it’s the male in a relationship who’s the financial abuser. What’s an example of the woman’s being financially abusive?

I had a case where the husband made the money and would deposit it in a joint account. But the wife would take it out and put it into her own account and allot the money to her husband — give him an allowance. Control is what was going on here.

Did the coupe get divorced?

Yes. Not shocking!

You identify five types of financial abuse. For instance, when one spouse doesn’t tell the other about all the assets the couple owns.

Often there may be a situation where one spouse has complete control of the finances, and the other has no idea what’s going on. I call that “being in the financial dark.”  But sometimes this is OK because one spouse may not care about [knowledge of] finances and doesn’t want to know. I’ve had cases where one person says, “I’ve tried to sit down with my spouse and go through our finances; but you see their eyes glaze over, and they say, “Stop bothering me with this.”

In the above situation of withholding information, what might the abuser say?

When one spouse wants to know what’s going on, the other would say, “I’m not going to tell you. It isn’t your business. Worry about your own things.” You’d be shocked at how often people say that.

Another type of financial abuse you’ve written about is one spouse stealing money from the other. Please elaborate.

Stealing is of course illegal under any circumstances. But what you see happening is if one person receives, say, a premarital inheritance or gift from another family member, the other spouse feels entitled to it. What goes through their mind is: “I’m going to use this money now for XYZ because you don’t contribute [financially] anyway.”

Then there’s the abuse of when one spouse doles out an allowance to the other. You mentioned this earlier, but does it occur often in other situations too?

Yes, it can happen whenever one person has control over all the finances and [dictates] exactly how much the other spouse can spend. This should not be confused with a family living on a budget. I’m talking about cases like one I had in which the husband went shopping and bought everything at Neiman Marcus and Bergdorf’s; but he basically told his wife she had to shop at garage sales. She was only allowed to spend a certain amount of money, whereas he could spend whatever he wanted.

Decades ago I knew a mother of two whose husband wouldn’t let her open a checking account. Does that type of situation still occur?

Yes. Abuse doesn’t go out of style.

The fourth kind of financial abuse you’ve identified is: One person in the relationship has to account to the other for “every dime” they spend.

I had a case where the husband needed $2 million or $3 million a year, but the wife had to show receipts for every single expense — down to pencils for their son’s school supplies.

A fifth form of financial abuse: One spouse doesn’t permit the other to work outside the home or makes them feel bad about wanting to work. In a male-female relationship, this is more typical of the male, I assume.

Right. Often it happens where children are involved. The father will guilt the mother who wants to go back to work with: “If you’re really a good mother, you’d stay home with your kids.” What it comes down to is that he doesn’t want her working because first of all, it’ll make his life more difficult since he’ll have to be more involved with child care. Secondly, he doesn’t want his wife to have outside interests because it’s a way of being independent of him. Not allowing the spouse to work is a way to keep them down.

What can financial advisors do to help couples avoid financial abuse in marriage? 

First, recognize that this goes on and watch for it. If the advisor’s relationship is with the [chief money-making] spouse and they see the couple going off-budget, they may be in a position of authority or, at least, respect, to say: ”I’m watching what’s going on, and this doesn’t seem like a healthy dynamic.” So the financial advisor might be in the best position to call the person out — especially in cases where one spouse is spending $20,000 a month and the other is spending $2,000.

How else can FAs help?

Let’s say the wife wants to come to a meeting with the advisor; but the husband says, “I don’t feel she needs to be there.” The advisor should encourage her to be there. Even if she’s not that interested, bring her into the financial conversation. Women should be encouraged to pull up a seat at the financial table. Let her become more financially educated and independent. Then she’ll be able to recognize that abuse is possibly happening, and the couple can go into therapy.

You say that many people in financially abusive relationships have no awareness that they’re in one.

Because it’s the dynamic of control they saw with their parents. The husband says to his wife, “My mom wasn’t interested in [the family’s] finances. So I’m sure you’re not.” But the advisor can tell him: “This isn’t how it should be anymore. It’s not right.”

How else can an advisor add value here?

Recommending prenuptial agreements as part of an estate plan is a really good thing. Also, it’s important to bring generational wealth to people’s attention by recommending that the client talk to their kids early on so that when they’re ultimately involved in a relationship, the issue won’t become personal to their [significant other].

Do you think that wives will be increasingly involved in a couple’s finances, thereby decreasing the level of financial abuse?

Yes because there are more women in the workplace and, women are more independent now. They have access to what’s going on in the outside world through social media, for example. There’s so much information out there.

When a couple is divorcing, what’s some key advice you have for the wife?

Whenever I hear the woman say — and this is very common — “I’m not sure what he’s going to give me,” I get crazy. He’s not giving you anything! It’s a question of how much you’re going to receive from the marital estate.

So when couples come to see you, is it because they want to divorce?

Yes, or else they’re not really sure and want to become educated about the law and the process. But sometimes if they [find] it’s going to cost them too much money, their spouse becomes much more attractive to them.

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